Research organization tracking commercial real estate capital rates, including debt and equity. Provides hourly rate update via the Real Estate Capital Rateline (773-227-4825). Staffed by volunteers with data as far back as 1983.
Investment sales activity in 2007 finished at near record levels despite the national disruption within the debt capital markets. Many firms reported Fourth quarter numbers were down significantly from historical norms and activity levels are expected to be lower in the foreseeable future. Driven by changing debt availability and terms, significant pricing gaps among buyers and sellers are creating delays in launching of any major assets sales. This slowdown is expected to continue well into 2008 until liquidity returns to the marketplace.
The new year triggers new hopes and fears as real estate capital markets continue readjusting from nearly a decade of uninterrupted volume and pricing momentum. While many investors fear new funding restrictions, others welcome more disciplined and “customary” underwriting practices deemed to be “normal.”
Prepayment penalties can be substantial to borrowers, as well as attractive profit protection for lenders. Borrowers need flexibility, while lenders seek yield preservation.
The highest risks and rewards are clearly centered in the land acquisition and development arena. Land is the first development ingredient impacted by economic cycles as is painfully obvious in today’s residential markets. And even in good times, land is burdened with costs and seldom offers income.
