Specifically, it comes to the following conclusions: Buyers are bullish on apartments and hotels, and retail is heating up. National Real Estate Investor and Marcus & Millichap have published research since 2004. The NREI/M&M Investor Sentiment Index for Q2 2011 rose to 164 in the second quarter, up from 152 in the fourth quarter of 2010.
More notable is that each property sector reported a marked improvement in investor sentiment.
Apartments recorded the highest index rating with a score of 166, followed by hotels at 158, industrial at 140, mixed-use at 139, retail at 135, and office at 123.
Wrote the editors: "Overall, investors' increasing confidence in the U.S. economy and the commercial real estate recovery is fueling demand for assets across property types. The outlook for property values has climbed dramatically in the last few yers. In the fourth quarter of 2009, nearly half of survey respondents (47 percent) expected retail property values to drop in the ensuing 12 months., with only 15 percent predicting an increase. Now those numbers have nearly flipped with 44 percent anticipating an increase, and only 9 percent forecasting a decrease in property values."
Good news, indeed!
Hotels also are benefiting from the ability to react quickly to an improving economy and scored 158 on the index. Apartments remain the favored property choice with 59% of respondents indicating that now is the time to buy apartments followed by industrial (35%), hotel and retail (34%), office (31%), mixed-use (30%)and undeveloped land (29%).
Among the driving factors, according to the Q2 study, is the improving jobs picture and the relatively low interest rates -- both of which are bolstering investor confidence. The addition of 244,000 nonfarm payroll
jobs in April was the biggest monthly gain since 2006. The 10-year Treasury yield, a benchmark for long-term commercial real estate financing, hovers around 3.2%, near historic lows.
In fact, eight out of 10 respondents cite low interest rates as the biggest factor driving their decision to increase the size of their commercial real estate portfolios.
Again, further evidence of what we are seeing here in the trenches.....