CRE Week in Review: M&A, Brooklyn Cool, and Rising Rents
This week started off with some significant M&A. On Sunday, the Real Deal broke the news that Colliers was buying RKF to boost its retail presence. Then, it was announced that Sun Life Financial would acquire Bentall Kennedy for $454 million. These deals are only the most recent in a string of CRE transactions this year, suggesting that consolidation and competition are increasing within the industry.
In other news, Donald Trump announced his candidacy for president. Will he bring the same kind of attention to CRE that Romney brought to private equity in 2012?
In other CRE news...
- Five CRE market trends you can bank on: Many believe that the CRE industry is ripe for a significant shift in the coming years. David Lynn, founder and CEO of Everest Investment Property, is one of those people. He has outlined what he believes are the five most likely trends.
- Fed says rate hike still on track for this year: Janet Yellen is sticking to her guns and says the Fed is planning to increase interest rates this year. Bloomberg reports, “New forecasts issued by the committee implied two quarter-point rate rises this year but a shallower pace of increases in 2016.” Will cap rates rise gradually, too?
- Everyone wants to become a real estate broker: Data from the New York Department of State reports that there are some 13,532 registered brokers (both commercial and residential) in New York State, the highest in the past 15 years. Looks like the competition is heating up.
- Office towers aim for a cooler vibe: Office towers — traditionally designed with ornate features and polished interiors — are adjusting their designs to better match the “Brooklyn Cool” vibe that is sought by many of today’s growing companies. Until the skyscrapers can offer this revised setting, many companies are favoring manufacturing districts over downtown.
- Lenders hungry for commercial real estate deals: The fact that “commercial real estate mortgages show relatively low delinquency” and that risk-adjusted yields for commercial mortgage debt are favorable has caused a flurry of lending activity in the CRE industry.
- Office rents climb, but tenants still have negotiating power: The influx of businesses to CBDs in recent years has caused a rise in rents, but there is “still a lot of room for favorable deals [for tenants] in most markets,” says Keith DeCoster of Savills Studley. There seems to be particular flexibility with lease termand number of concessions.
Billy Fink is a former member of the VTS team.
