Profimex Market Review Update – December 15, 2020
Apartment Values are Coming Back
During the pandemic, apartment transactions, like those of other commercial real estate sectors, showed a discount between 5% to 10%. According to the co-chief investment officer of TruAmerica, Noah E. Hochman, this discount did not last for a long time. “[Many investors] are rebalancing the multifamily because they’ve seen it as being very resilient in this crisis. So, with low-interest rates, there is a lot of capital that wants to buy multifamily right now. It has really supported the pre-COVID values.”
Not All Industrial Assets Are Trading at Frothy Prices
The pandemic has certainly accelerated the pre-COVID trend of e-commerce, and has led to a rapid compression, in some cases, to below 4%. While properties with strong tenants, such as Amazon or FedEx have seen a strong demand from institutional investors, one should not assume that every industrial property can trade at such low cap rates. While the e-commerce giants need highly advanced technology and specific layouts, the average industrial, who represents a larger market share, does not necessarily need those kinds of properties.