Magazine article Mortgage Banking , Vol. 62, No. 12
ACCORDING TO CHICAGO-BASED REAL ESTATE Research Corporation's (RERC's) second-quarter 2002 investment criteria presented in the summer 2002 issue of the RERC Real Estate Report, the availability of capital--both for debt and equity investment--remains at an all-time high. RERC's research was based on survey responses of more than 160 real estate experts nationwide. "Real estate is tangible and more transparent than stocks, so it stands to reason that during this time of mistrust, investing in what you can see is more appealing than what isn't visible," said Ken Riggs, RERC's chief executive officer. "As a result, capital is driving the market, but it is much more disciplined than in years past. Real estate deal flow is beginning once again as buyers and sellers make decisions based on quantifiable market fundamentals."
RERC's research maintains that, due to increasing unemployment, vacancy rates continue to increase for most property types on a national level and in most of the 31 metro areas RERC tracks. Due in large part to high vacancies, values have declined for all nine property types that RERC surveys. Although expenses have decreased slightly, rental growth expectations also have dropped 0.2 percent for regional malls, 0.3 percent for apartments and neighborhood/community centers, 0.4 percent for warehouses, 0.6 percent for power centers, 0.7 percent for hotels and central business district (CBD) offices, 0.9 percent for suburban offices and 1.0 percent for research and development (R&D) industrial properties.
In spite of the poor showing for rents and values, however, institutional respondents rated investment potential higher in the second quarter than the first quarter for seven of the nine properties that RERC surveys. Investment conditions for CBD and suburban offices increased to 5.6 and 4.4, respectively, while warehouse and industrial R&D properties increased to 6.3 and 4.1, respectively. …