Whatever else you can say about 2015, it was without a doubt a very big year for the U.S. commercial real estate industry. Here we look back at some of the biggest deals and trends that happened in the past 12 months.
New investors have piled into the market for student housing properties—driving property prices and the volume of deals up and driving capitalization rates down. The new student housing buyers include private equity funds and institutional investors, which are becoming much more likely to bid for student housing properties.
There is a correlation between the bond market and commercial real estate, and that could mean that there are some definite changes ahead.
The changes in BBB and BB rated bonds are most relevant to the real estate market. To that point, the low investment grade BBB and high non-investment grade BB bonds saw yields rise in the fall.
Micro-units—rental apartments about the size of a hotel room—represent a small but growing niche of the real estate multi-housing market. These miniscule living units seem ideally suited to young people who are mobile, come and (mostly) go and live the “18-hour” lifestyle of the modern urban townscape.
In November, Walgreens Boots announced plans to acquire Rite Aid, and the $17.2 billion deal would pare the drug store sector to two national players—Walgreens and CVS. The acquisition will likely have a significant impact on the retail real estate industry, particularly the net lease sector.
Investors crowded into self-storage as the sector continues to post the highest long-term returns of any commercial property type.
Cult classic Back to the Future II came amusingly close to calling the winner of this year’s World Series with its bet on the Chicago Cubs for October 2015, but it didn’t delve too much into the world of real estate investment. Maybe it should have—many industry pros surely felt like they entered a time-warp.
Investors are finally buying apartment properties in big numbers in smaller cities and towns. “There’s been a dramatic increase in the number of offers for properties in secondary and tertiary markets,” says John Sebree, director of Marcus & Millichap's National Multi Housing Group. “It’s been moving in this direction for some time—now it’s moving at a faster pace.”
A growing development pipeline is not dampening the outlook for the seniors housing sector. The big story of late in the seniors housing sector has been the uptick in construction.
Mergers & acquisitions activity continued to transform the brokerage sector in 2015. Check out our M&A timeline, starting all the way back in 1773.
Jonathan Gray and Blackstone’s real estate division certainly kept busy in 2015, purchasing entire property portfolios with the same ease ordinary people pick up take-out.
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