Monday, December 10, 2012

Sales of U.S. commercial properties fall

The U.S commercial real estate industry is showing small signs of improvement, according to a report released Monday by an industry trade group.

Commercial property values nationwide remain flat, and the volume of deals has decreased, according to CCIM Institute, an industry trade group. Sales of hotel properties fell 25 percent during the past year, for example. Office and retail projects fell roughly 15 percent and 10 percent, respectively. And sales of apartment complexes fell about five percent from the previous quarter.

"Get used to it, as this is the 'new normal' for the economy and we should expect this investment environment for the foreseeable future," said Kenneth Riggs, Jr., the group's chief real estate economist. "The low-hanging fruit has been picked."

On the positive side, investment conditions have improved modestly across all property types compared to last year, the report says.

Slow economic growth, high U.S. joblessness and anticipated federal tax increases weigh are dragging down sales.

The report, based on a third-quarter survey of CCIM members, found a silver lining:  Commercial real estate remains a reasonable and sturdy investment choice for investors seeking realistic returns and minimal volatility, CCIM members reported.

"There are plenty of investors seeking to avoid the volatility of the stock market, and who require higher yields than those offered by bonds and cash investments," Riggs said.