Deal of the Week: Office Building in Mission

Grant Reves, Aaron Mesmer, Brian Beggs and Ken Block of Block Real Estate Services, LLC

(BRES) closed on the sale of an office building in Mission, Kansas

What CRE Investors Need to Know for 2014

2014 is already shaping up to be a year where dynamic changes will occur in the commercial real estate investment market. While working on our 2014 Real Estate Report for Kansas City, we gleamed a great deal of insight that professionals could apply to their businesses in 2014. In this post, we will discuss three changes in the landscape that CRE investors will need to know about in 2014:

The Importance of Expertise in Capital Market Investment

Many investors who are seeking to construct a well diversified portfolio often focus almost exclusively on publicly traded equities and fixed income securities. They fail to consider the role that well chosen real estate investments can play in addressing the challenges presented by a world of low to negative real interest rates, broadly eroded credit quality and near record stock prices.

While the proliferation of ETF’s and industry specific index funds has made it easier for investors to target the exposure they need to various invest-able sectors of the economy, the perceived obstacles to investing in non-securitized real estate persist.  Given the increasing uncertainty related to the continuation of quantitative easing, the potential headwinds from the sequester and increasing volatility in public markets, it is now a good time to review those perceived obstacles and reassert the rationale for making an allocation to the asset class when it is time to re-balance one’s portfolio.

Day 11: 12 Days of the KC Market Report: Investment

The Unites States commercial real estate recovery has remained at a slow but steady pace.  The recovery has seen improved commercial real estate fundamentals, an increased number of investment transactions, increased asset pricing, and the abundance of capital in both debt and equity.

Money In Multifamily: The Final Investment Series Post

As the final blog post in our three-part series focused on CRE investments in Kansas City, we look to the multi-family market sector and also sum up the overall 2012 outlook.

Multifamily
The darling of the commercial real estate investment world continued to be multi-family. With long-term debt at sub-4% interest rates provided by Fannie Mae and Freddie Mac, buyer activity remained “white \ hot.” Multi-family investment sales activity in 2011 outpaced the number and quality of transactions completed in 2010. The 340-unit Barrewoods Apartments sold at a 5.72% cap rate for $100,735 per unit ($34.25 million). The 324-unit Cordillera Ranch was sold by Sentinel Real Estate Corporation to A.G. Spanos Companies for nearly $32.6 million and at a 6.34% cap rate. Sentinel Real Estate Corporation also purchased the Fairways at Corbin Park, a 276-unit complex in Overland Park, Kansas, for $30.5 million at a 6.0% cap rate.

Kansas City CRE Investments: The Office Market

Last year, the Kansas City commercial real estate investment market came back to life.  Sales activity rose to levels not seen since the first part of 2008. Low interest rates, the pressure to place equity, and the fear of missing out on good pricing, made commercial real estate investment activity rebound. However, these three factors alone would not have increased activity without sellers and buyers changing their mindset in 2011 as it relates to pricing and expected returns.

In all investment classes, the activity pace in Kansas City heightened in 2011. In actuality, the number and quality of sales completed outpaced prior year projections. Kansas City continues to have a large number of institutional buyers that have invested locally.

The 2012 Multifamily Market

Commercial real estate remains in vogue with investors despite marginal gains in the overall economic outlook and concerns stemming from the European debt crisis.  For these investors, the multi-family market emerged as the clear favorite among the traditional four commercial property types in 2011, a trend that is expected to continue well into 2012.  While office, industrial and retail grapple with weak demand, a strong fundamental recovery in rental housing demand has propelled apartments to a broad recovery in occupancy, rental rates and investor pricing. 

With more than 3 million foreclosures since 2009, profound shifts in demographic, economic and social patterns have changed the way many Americans, particularly those of the millennial generation, feel about home ownership. This, combined with the entry of the first wave of “echo boomers” graduating from college, has resulted in the addition of an estimated 1.4 million renter households.