X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

GREATER BOSTON-Despite anemic leasing fundamentals, demand for well-leased assets with stable cash flow remains high, according to Meredith & Grew’s recently released third quarter 2003 market report.

The report notes that the lack of investment offerings has created a “supply/demand imbalance” which has led to very competitive pricing. Investor demand, it points out, is being fueled by a number of factors including historically low mortgage rates, relatively attractive returns compared to alternative asset classes, portfolio diversification needs, and long-term confidence in the city’s economy.

Most institutional investors are still looking to put their money into multifamily residential and grocery-anchored retail properties. Industrial and flex properties are also popular due to the relative stability of the submarkets and the lack of on-going capital demands. Not surprisingly, the report says that suburban office remains the most “problematic” in terms of what it calls the “bid-ask gap” because of the uncertain leasing conditions and investor concerns about the relationship between economic value and replacement cost. These conditions are leading many suburban office owners to remain on the sidelines or to refinance, where they can take of inexpensive debt.

Pricing on Downtown office remains very strong, the report says, despite increased vacancy. However, it emphasizes that investors will only pay a premium for those assets with strong in-place leases and limited near-term roll. Many opportunistic investors are seeking underperforming assets with upside potential across all sectors.

The report predicts that sales volume will not change dramatically this year. The leasing market, it notes, needs to experience some recovery in order for investment offering volume to increase significantly. But there will be what it calls “steady deal flow” from low basis opportunist, corporate owners, re-tooling REITs and, in isolated cases, lenders in foreclosure.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.