North American real estate investors bullish on industrial

Investors buying North American real estate this year will prefer to boost activity through the industrial sector, according to a new CBRE survey.

The survey showed that one-third of respondents prefer industrial assets; more than any other asset class, including office and multifamily.

“Industrial is generally viewed as having more upside, and the fundamentals are quite good,” Brian Stoffers, global president of debt & structured finance with CBRE, told Real Estate Capital. 

The survey showed that half of investors expect their purchasing activity to increase in 2015, and one-third of that group plans to raise volume by 20% or more.

But investors are watching as pricing in some major business districts goes through the roof, identifying increased competition and rising prices as their greatest obstacle in 2015.

As a result, a majority said they are either willing or forced to look beyond core assets to obtain yield, with more than 50% of survey respondents selecting value-add as the most attractive asset strategy.

Some lenders are worried about “lofty valuations” among core assets and markets too, Stoffers said, which makes both industrial and value-add opportunities attractive.

“Unlike the equity side, there’s not a lot of difference in pricing between different markets on the debt side,” he said. “Returns on a high-rise office in Manhattan and a well-located industrial building in New Jersey are not that different.”

The 18-question “North America Investor Intentions Survey 2015” surveyed 80 CBRE clients, based primarily in the US representing a cross-section of real estate companies and investor types.

Fund or asset managers made up 33%, private property companies 17%, REITs 15% and private equity or venture capital firms 12%.