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April 2017   Volume 43, Number 4      
 

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Big Institutions Sell off Commercial Real Estate

Big institutions are selling commercial real estate as the market weakens due to rising interest rates and a surge in new supply. Brookfield Asset Management is one of the major firms that sold more properties in 2016 than they bought.

The demand for trophy properties is declining. Commercial real estate sales value fell by $58.3 billion, or 11 percent during the first half of 2016, according to Real Capital Analytics. This decline marks the first dip since 2009.

In 2016, Brookfield sold a net $4 billion in real estate. This year, the firm plans to sell an additional $1 to $2 billion. The firm is currently marketing a 49 percent stake in Manhattan’s Brookfield Place office complex.

“We think now is an opportune time to reduce some of our exposure to that asset,” Brookfield Asset Management’s senior managing partner Brian Kingston told the Wall Street Journal. “We can recycle the capital into higher returning investment opportunities.”

Large institutions are becoming less bullish on acquisitions because rising interest rates make bonds look more profitable as compared to real estate. In addition, a surge in new construction is increasing supply and lowering prices.

A benchmark index compiled by the National Council of Real Estate Investment Fiduciaries shows that real estate returns increased in 2016. However, the pace of the increase was slower than in years prior.

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In this issue:

Top U.S. Markets for Buying and Selling Real Estate

Big Institutions Sell off Commercial Real Estate

Fed Chair Says Rising Real Estate Prices Put Small Banks at Risk

Iowa Realtor Warns Agents about Email Scam

Mortgage Delinquencies Spike among Some Homeowners

Next-Generational Homes Are the Latest Real Estate Trend

Silicon Valley Is the Top U.S. Real Estate Market

Top Three Legal Issues Facing Brokers

Trump Cut Causes FHA Applications to Decline by 3.2 Percent

Real Estate Agents: Stop Commoditizing Your Services

 


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