In this week's issue of CoStar Lead Street, Mesirow Financial's Joshua Daitch says 2008 will separate out the good property managers from the not so good. Macquarie Office Trust finds U.S. property a good deal but not as good as Asia where it is putting its money now. Philip Blumberg, president and CEO of Blumberg Capital Partners, who knows a thing or two about real estate, is taking a cue from the hotel industry and instituting the Five Star rating system for his office properties. Besides these and other stories, we tell you where corporations have decided to grow, including Goodyear's plans to sell and leaseback its headquarters space in Akron, and tell you of the latest major properties to come under contract for purchase.
Back to the Basic of Creating Value
Despite the subprime credit crisis that contributed to a volatile second half of 2007, fundamentals in many global markets remain solid, driven by strength in institutional real estate said Joshua Daitch, managing director, Institutional Real Estate at Mesirow Financial, at its fourth annual Investment Outlook in Chicago.
"Vacancy rates are low and rents are growing in many major markets around the world," Daitch said. "Given the new debt realities, the markets are going 'back to basics,' focusing on hands-on asset management to create value at the property level rather than relying on falling cap rates to make returns. This should favor value-added and opportunistic managers in 2008."
"We believe that the dispersion of returns between top-quartile performers and median will widen as a falling tide will leave many average managers (with recent high, momentum-driven returns) wondering what happened," Daitch added. "Additionally, we believe that there are greater risks to postponing/delaying global diversification than there are to executing a global real estate strategy now."
"Along these lines, we expect an increased pace of cross-border real estate investment of at least 10% (45% of transaction volume was from cross-border buyers or vendors in the first half of 2007). Relative to return expectations, we expect the NCREIF Property Index, a benchmark for private real estate performance in the U.S., to achieve 4%-6% growth in 2008 driven by growing property income and flat to negative capital appreciation."
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source: costar.com
