Colliers International Group Inc.
has issued its 2015 Q1 U.S. Capital Flows Report
, which shows that commercial property investments are up 45 percent in the first quarter of 2015. According to the analysis of data from Real Capital Analytics, office and apartment transactions led the market, with quarterly sales of $33.5 billion and $33 billion respectively.
"Overall, we are seeing investor confidence continually emboldened, as evidenced by the increase in cross-border investments across property types," said Brian Ward
, President, Capital Markets & Investment Services | Americas for Colliers International. "However, it is important to keep this encouraging data in perspective. For example, although apartment transactions increased up to 68 percent over the same period last year and office sales saw a 43 percent increase; both property types experienced declines from their Q4 2014 levels."
Key takeaways from this report include:
- Cross-border investment more than doubled (111+ percent) this quarter over one year prior, capturing $22.2 billion in properties across all major types.
- Office and apartment sales lead the way with quarterly sales of $33.5 billion and $33 billion, respectively.
- Traditionally leaders in cross-border investment into the U.S., Canadian investors were edged out by sovereign wealth funds from Asia. Examples include GIC's acquisition of the huge IndCor industrial portfolio from the Blackstone Group.
- Entity-level transactions make significant jump in Q1 2015, with $21.5 billion worth of companies acquired. This was nearly equal to the 2014 full-year total.
- Liquidity events refresh coffers: Industrial transaction volume, which totaled $21 billion in Q1 2015, saw by far the largest jump this period, up 97 percent from $10.6 billion in Q1 2014 and 23 percent from $17.1 billion in Q4 14, due entirely to an unprecedented spike in entity-level deals. At $9.2 billion, Q1 2015 was the biggest quarter for industrial mergers since RCA started tracking the market. The bulk of this was due to one major transaction by Blackstone.
- Private equity takes profits: Blackstone was looking to cash out, and the word on the street was that an $8 billion IPO was in the works for their industrial subsidiary IndCor Properties. But when the Singapore Govt. Investment authority GIC Group came knocking with $8.1 billion, the deal was done.
- Private to public REIT shift: Private, non-traded REIT CCIT, managed by Cole Capital, also found an exit strategy. After acquiring its portfolio of industrial and office properties between 2012 and 2014, including over $2 billion in property acquisitions in 2013. The bulk of these were single properties and small portfolios purchased from local developers.
- Outlook for interest rates uncertain: Long-term interest rates have been somewhat volatile in 2015 as Wall Street attempted to handicap the timing and magnitude of the first post-recession increase in the Federal Funds Rate.