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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 ahead of any other asset class, including office and multifamily.

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.

Brian Stoffers
Brian Stoffers

“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%.

 

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