2011 could well prove to be a very good year for commercial property investors.
With sales in the region of $160 million being reported by commercial real estate firms in just 34 deals up to April of this year, this is a staggering 200% rise from the $48 million recorded sales in the first four months of 2010.
Just last week, we saw one of the biggest commercial property deals for a long time – the $100 million acquisition by Al Lingerfelt of Liberty Property Trust’s huge suburban office space portfolio.
Looking back over the year so far, we can see a massive surge in real estate investment, and it’s something that brokers have also noticed out in the field too.
“The sales market for commercial real estate is finally beginning to get up some steam, and I think from now on we’ll see quite a bit of activity,” said CB Richard Ellis broker Walton Makepeace.
Makepeace was one of the key dealmakers in this year’s second largest commercial deal, the American Real Estate Partner's $63.7 million purchase of the Riverside on the James building from Dominion Realty Partners.
“That deal is going to get some momentum going in the Richmond office building’s market,” said Makepeace after the transaction was announced.
Other huge deals in commercial real estate this year include the purchase of the $26 million Byrd Center Business Park by two real estate funds based in Dallas and Miami, and the $18 million deal which saw Richmond Cold Storage lease back one of their facilities.
Another notable deal was Brandywine Realty Trust’s $12.54 million purchase of two buildings in Innsbrook.
REITs are once again becoming active says Makepeace, with a large number of prospects that couldn’t buy in places like New York or Washington turning to second-tier markets like Richmond.
“It hasn’t been a great selling environment for office buildings over the last couple of years,” said Makepeace. “But that is starting to change.”
Commercial REITs really seem to be doing well this year. Another big transaction I read about was by Cole REIT. Cole acquired the University of Phoenix office complex in Phoenix, Arizona for $170 million. I believe it was the largest transaction in Arizona history. So there are definitely a lot of large transactions happening in just the beginning of the year so far, I'd think it would be a great time to invest.