How Buyer Attitudes Are Changing in 2013

MIAMI—Is it a buyer's market? A seller's market? Are buyer and seller attitudes changing? As part of our ongoing series this week, we asked Glenn Cohen, CFO of Kimco, for this take.

In case you missed it, in part one of this series we asked Cohen what he sees as the biggest challenges retail real estate owners face this year, and his view of the economy through the commercial real estate lens. In part two, we dived into his certainty—and what he sees as the biggest opportunities in the market. In the third part, we discussed 2013's best and worst retail real estate markets. Now, we'll explore buyer and seller attitudes.

GlobeSt.com: How have buyers' attitudes or strategies changed over the past 12 to 18 months?

Cohen: In general, buyers' attitudes improve when there's more access to capital. With the continued compression of cap rates, a thirst for yield, and the record amount of unsecured bonds being issued, there is an increased flow of capital. Pension funds and insurance companies are continuing to take in premiums daily and are looking for places to put that money to work.

GlobeSt.com: How are buyer attitudes likely to change throughout the course of the year?

Cohen: In the better performing markets, you will probably see some further cap rate compression in 2013 if interest rates stay as low as they are. As a result, pricing is becoming more aggressive. Buyers should be cautious and careful about what they are acquiring and be aware that while there may be a lower going-in cap rate, it is important to be focused on the growth potential of that asset.

GlobeSt.com: How have sellers' attitudes or strategies changed over the past 12 to 18 months? And how are they likely to change throughout the course of the year?

Cohen: I think it will be a pretty interesting year in terms of both acquisitions and dispositions. Kimco has been recycling capital for the past couple of years, and we have sold off our more challenged assets and bought assets in better markets. There will be some trading of better-quality assets as we go through the year. With capital available and a low interest rate environment, transaction activity across all product types and all asset tiers should be brisk.