Investment Market: A look back at the first half of 2013 from TOK Commercial

MERIDIAN, Idaho - Sept. 3, 2013 - PRLog -- Investment Watch
Transaction volume in the first half of 2013 has already surpassed 2012’s total and is on pace for its strongest year since 2008. The gap between buyer and seller expectations has narrowed, leading to increased sales activity. However, uncertainty continues to suppress activity. Buyers remain risk averse, primarily seeking stabilized assets with strong market fundamentals.

With fewer distressed and bank-owned sales occurring, sellers will find fair market prices for their properties. Accurate sale comparables are helping guide appraisals and providing sellers with valuable information as they position their assets. Many properties with fair market pricing are receiving multiple offers. Some of today’s sellers were yesterday’s buyers of distressed properties. These sellers have worked to stabilize the property with the goal in mind to flip the property.

Out-of-state buyers are attracted to Idaho’s higher capitalization rates and the ability to purchase quality product in the $1 to $2 million range. The downside is that local investors are facing heightened competition with out-of-state investment groups that are more aggressive and want to close transactions quickly.

With interest rates remaining low, investors are more comfortable assuming or placing new debt on properties. Cash buyers still exist, though not at the levels seen in the past few years. Lenders are seeking well-capitalized investors and these buyers are receiving competitive offers from banks to fund their loans.

Capitalization rates vary by product type, but most have stabilized in the 7 to 8.5 percent range. Higher cap rates still exist for distressed properties. Multifamily projects, viewed as having minimal risk, are in high demand, but the supply of quality product is low. These properties are seeing cap rates in the 6 percent range. Retail assets continue to trade, but there is concern about the long-term stability of some of these assets due to low market rents and high tenant improvement costs.

For more information regarding the Boise Industrial Real Estate Market, as well as the surrounding area, please visit http://www.tokcommercial.com.