Conversation With Debra Barbanel on page 18
CommNews Roundup on page 19
Year of the ‘Small Deal’
Medium-sized markets are poised to shine in 2013 with
investors eyeing industrial opportunities. By Mariwyn Evans
What Makes and Keeps a City Hot?
Last year was a sizzler for commercial real estate.
“In 2012, markets expanded much faster and stronger than many anticipated,” says Ken Riggs, ;;;,
CEO of Real Estate Research Corp. in Chicago.
Deal volume for sales over $2.5 million reached almost $268.5 billion, a 17 percent increase over 2011,
according to preliminary estimates from Real Capital Analytics. Capital markets, especially CMBS,
also surged, with bond sales reaching $46 billion
in 2012, a 50 percent gain over 2011, according to JP
Morgan Chase & Co.
So, will 2013 be as robust? “It’s going to be a hot
year for real estate,” predicts Mitch Roschelle, U.S.
real estate advisory practice leader for PwC in New
York. Investors looking for durable cash flow will still
choose commercial real estate, he says. Roschelle believes that 2013 will be “the year of the small deal.” All
the publicity is about the $100 million–plus sales, but
“this year will see small partnerships pooling capital
to buy commercial real estate,” he says.
CMBS lending is also beginning to look favor-
ably on smaller deals in secondary markets. Case in
point: In Dec. 2012, Bob Goldstein, CEO of Hos-
pitality Consultants in Boca Raton, Fla., closed a
$3.95 million, 81-unit hotel deal for a client that had a
$2.3 million nonrecourse loan from a major national
bank. The bank planned to securitize the mortgage
through a CMBS pool. “In 2013, we expect to see a
continued, gradual decrease in vacancy and a mod-
est improvement in rents for most property types,
in most markets,” says Fred Schmidt, president and
COO of Coldwell Banker Commercial. He cites a
few national stats comparing results from the third
quarter of 2012 with projections for 2013 perfor-
mance. The trends cited below are generally consis-
tent with forecasts for the same sectors by NAR’s
b Multifamily vacancy will drop to 4. 3 percent by
late 2013, from 4. 6 percent in the third quarter of
2012, according to REIS.
b Industrial vacancy will decline to 11. 8 percent
from 12. 4 percent, per CoStar. >>>
Top 10 Deal Gainers in 2012
Columbia, S.C .
Cities that saw the greatest year-over-year increases in
deal volume during 2012 included some unexpected entries.
Source: Real Capital Analytics, based on preliminary Q4 data and covering deals
of $2.5 million or more.