Fuelled by exceptional growth in retail property and low-rise apartment investment, American commercial property investment grew 57% year on year in 2011 according to the latest data from Real Capital Analytics.
The data shows that more than 14,700 properties, each worth at least $2.5 million changed hands in 2011, with retail property investment up 91% compared to 2010 and low-rise apartment investment up 70% compared to the previous year. This was in spite of the fact that turmoil in the MBS market curbed finance leading to a slowdown in transactions in the second half of the year. However, the office and hotel sectors did see an effect from this, with transactions falling sharply in the final quarter following large year on year growth in the previous six quarters.
According to the firm the rise was fuelled by debt-laden owners selling off assets acquired during the boom years at low prices, at the same time as investors were seeking increased yields from income-producing properties.
"Buyers have started to broaden their horizons both geographically and by property type," the firm said.
This is by far the most positive data we have seen on commercial property investment in the US last year. Normally when you see such large growth it is because of an exceptionally poor performance in the previous dataset, but this is not the case here; we know that US commercial property transactions held strongly in 2010.
Meanwhile, in other news we learned this week that New York-based buyout firm Blackstone Group LB has raised $6bn in pledged funding for a new $10bn property fund. Sources, who refused to be named because the capital raising is private, said that the fund will be used to buy mainly distressed assets. The fund is to be named Blackstone Real Estate Partners VII and will no doubt be a hot tip as the American economy continues to press on into recovery.