Facility owners and managers should always stay abreast of current real estate trends, so a recent article from Peter Burley and David Lynn on the Urban Land Institute’s website should be of great interest.
The duo, who contributed to ULI’s new book (The Investor’s Guide to Commercial Real Estate), used the website’s blog post to highlight six potential real estate trends for 2015. The first trend they noted is that there will likely be increased allocation and capital flow this year.
With most institutions—not to mention high-net-worth investors—still being underallocated to real estate, combined with the strong four- and five-year performance of both NCREIF and NAREIT, we can expect more investment capital coming into commercial real estate. The significant amount of capital would be vexing if not for the fact that real estate seems to offer some of the best risk/reward propositions around, particularly given the multiyear run-up in equity and bond values. Look for higher allocation targets, and more foreign and retail investor money to continue to push capital values up well beyond the 2007 peaks, which should be cause for concern.
Visit ULI’s website to read about the five other trends, as it could help determine your next big move for the New Year.