Investors Buy $851M in Real Estate in 1st Half

It is only surpassed by the $1.3 billion in the first half of 1998, when real estate investment trusts were buying huge office portfolios. Neiman's report includes offices, retail and industrial, but neither multifamily properties nor land.

Low interest rates and a lack of alternative investments fueled this year's buying spree, Neiman says. Indeed, with rates at 45-year lows, buildings leased to credit-worthy tenants for long periods of times commanded historically low cap rates, he notes. There also is a healthy appetite at the other end of the spectrum for value-added deals, he says.

And even though rates are creeping up, they are still extremely low, Neiman notes. And he says that unlike 1998, the interest in real estate by institutional investors may not be going away.

"This year's performance is likely to be something of a standard," Neiman tells GlobeSt.com. "We've raised the bar. What's new in all of this is that real estate as an asset class has been more legitimized and accepted by Wall Street…It won't be like 1998 when the previous circumstances came together to fuel the REITs buying up large portfolios and then it just evaporated."

The one thing that Denver market doesn't have at this time is the "huge portfolios" of $100 million and $200 million selling in one large swoop. Instead, the 84 transactions in the first half of the year were dominated by retail sales. The single largest sale was Developers Diversified Realty Corp. paying $55.5 million for the FlatIron Marketplace in Broomfield, and the second largest was Inland Realty paying $51.5 million for the Arvada Marketplace. The largest office deal was the Denver-based Broe Cos. paying $34.16 million for the Mile High Center in downtown Denver.

In the first half of the year, 39 of the top transactions were retail, 21 were offices, and 24 were industrial properties. The sales volume this year is 143% higher than the $346.622 million in sales in the first half of 2003. Last year at this time, there were 14 office deals, 13 retail transactions, and seven industrial deals. In the first half of 2002 there were 37 transactions for $281.06 million, in 2001 31 transactions for $313.96 million, and in 2000, 55 transactions for $416.274 million, according to Neiman.