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It's no secret that investment in commercial property has contracted since its 2007 peak, when real estate values began to freefall and defaults began to soar. But with the[IMAGE]
retrenchment, a new study from the research firm ""Real Capital Analytics"":http://www.rcanalytics.com shows that new buyers have taken a more prominent role in moving the commercial real estate (CRE) market forward.
Real Capital says new buyers accounted for just 15 percent of investment volume as capital poured into CRE opportunities three years ago. Now, their activity has almost doubled, with their share of investment activity comprising nearly 30 percent of the sector's dealmaking.
New buyers emerging in the past year or so reflect both the current state of the capital markets and of the market dynamics within each property type, according to the analysts at Real Capital.
Across the spectrum, new private, often local buyers predominate, in part because of their access to deal information at the local level and to other sources of capital. The company says this is especially true when it comes to distressed properties in the retail and apartment sectors, where new buyers, such as Colorado-based ""Condo Capital Solutions"":http://www.condosolutions.biz, have been successful in acquiring assets out of distress.
[COLUMN_BREAK]Over the past year, Condo Capital Solutions has focused its efforts in the Southeast and Southwest regions of the U.S., targeting opportunities in Florida, Arizona, Nevada, and California â€" markets the company says ""have experienced significant over-building or over-conversion and which are now seeing dramatic price deflation.""
Real Capital says a significant feature of the new-buyer landscape is ""reborn investment managers wearing new clothes."" The firm says a few of these are longstanding property managers who have tapped into capital and begun investing on their own, while in contrast, relatively few are the large opportunistic funds that have amassed lots of capital.
These often well-known but repositioned players now have access to both deals and capital sources that they may not have been able to utilize in their former positions, Real Capital explained. The company points to the specific example of Richard Blum, former CFO of Chicago-based developer Fifield, who founded ""White Oak Realty Partners"":http://www.chicagobusiness.com/cgi-bin/article.pl?article_id=33228 earlier this year with backing from another Chicago developer, the ""Alter Group"":http://www.altergroup.com. White Oak's first deal, a two-building suburban Chicago office portfolio from Tisham Speyer, was made through a joint venture with investment manager ""Angelo Gordon"":http://www.angelogordon.com.
Real Capital says new foreign buyers are also making their mark: five of the top 15 new investors since 2009 are based outside of the United States, including three in Asia Pacific.
These cross-border buyers have also honed in on distressed assets. Real Capital says China's Standard Portfolio acquired 5,000 apartment units out of distress, and ""Kumho Investment Bank"":http://www.ekumhobank.com of South Korea acquired two AIG assets from the troubled insurance giant. Taking advantage of the decimated hotel market, Real Capital notes that Malaysia's ""IBG Corporation"":http://www.ibgv.com.my/about%20us.htm bought two W Hotels in New York.
