PwC: Investors anticipate opportunities in commercial real estate

By Rob Starr, Content Manager, Big4.com

According to the fourth quarter 2012 findings of the PwC Real Estate Investor Survey, commercial real estate offers varied investment opportunities across each major sector and a diverse number of cities. Although core trophy assets remain the preferred target of both domestic and international investors, aggressive pricing and improved fundamentals have resulted in certain investors looking to buy either core in strong secondary markets or less-than-core in primary markets.

In the fourth quarter of 2012, the average overall cap rate for commercial real estate, the initial return anticipated on an acquisition and a reflection of an investment’s anticipated ownership risk, decreased in 24 of the surveyed markets, held steady in seven, and increased in just one of them. In the apartment sector, surveyed participants believe commercial real estate market conditions continue to favor sellers, but some investors sense that rents may have peaked for now and that certain markets have become overpriced.

The PwC Real Estate Barometer included in the Survey tracks the anticipated performances of the four main property sectors (office, retail, industrial, and multifamily) from 2012 to 2015. For the office sector, even though the sector’s recovery as a whole lags behind other commercial real estate property sectors due to lower job creation among office-space using companies, as well as an evolving work environment, many metros are benefiting from a lack of new supply.