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CRE Investors Make Fewer Big Deals, But Raise More Money

The amount of uncalled or undrawn real estate investment capital, or “dry powder,” has grown to staggering levels. This increase has come at a time when the investment climate remains decidedly mixed, with top-quality assets in core markets commanding high valuations after a sustained up-cycle. As a result, investors are increasingly searching elsewhere for properties that offer potentially higher yields.

The effects are showing up in deal volume. The total dollar volume for real estate sales of $100 million or more in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – was 19.5 percent lower in the first half of 2017 compared to the same period in 2016. However, the deal volume for properties at prices of $100 million or less was just 2.3 percent lower, according to CoStar COMPs data.

Meanwhile according to Preqin, a leading source of information for the alternative assets industry, investors in U.S. and Philadelphia commercial real estate properties are finding it increasingly challenging to find attractive opportunities for allocating that raised capital, according to Oliver Senchal, head of real estate products for Preqin.

This report on the disruption of new capital flowing into existing investment funds in relation to national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.

“This [trend] places pressure on less-stablished fund managers, who are facing greater competition for the remainder of investor commitments and will have to find ways to stand out from one another to attract capital,” Preqin’s Senchal added.

Even as the volume of big real estate deals drops in the U.S. and Philadelphia commercial real estate markets, CRE continues to attract more institutional capital allocations. In fact, 2017 represents an important milestone in this regard, according to Cornell University’s fifth annual Institutional Real Estate Allocations Monitor survey.

The survey revealed that for the first time, global institutional investors’ average target allocation involving national and Philadelphia commercial real estate listings surpassed the 10 percent threshold.

Over the past five years, institutional portfolios throughout the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – have increased their exposure from 8.5 percent to 9.1 percent invested. This implies that real estate portfolios have increased by approximately $0.5 trillion in total value, through a combination of capital appreciation and new investments.

Although real estate has enjoyed a steady uptick in target allocations, the report reveals the pace of target allocations is moderating among U.S. and Philadelphia commercial real estate listings. Approximately 22 percent of institutional investors surveyed indicated they expect to increase their target allocations over the next 12 months, down from 30 percent in 2016.

For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.

Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.

As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.