Investors seeking to deploy large amounts of capital quickly can acquire either a trophy tower in midtown Manhattan or multiple buildings in a single deal, with the discount that comes with buying additional properties offering the opportunity for greater returns, said Jim Costello, a senior vice president at Real Capital.
“A portfolio is going to deliver a better initial yield than that office building in New York,” he said.
As values climb, returns are shrinking. For an office building in Manhattan, the capitalization rate -- a measure used to calculate the yield on a property investment -- has declined to 4.1 percent, the lowest since December 2007, according to Green Street Advisors LLC.
Buyers are widening their sights as they search for enticing deals, said Stanton, who advises Cushman’s overseas clients. That’s making it easier to unload large chunks of real estate that would be cumbersome to sell piecemeal, she said.
Buyer, Seller
For Blackstone, the world’s biggest private equity real estate investor, it’s a good time to be both buyer and seller, said Ken Caplan, the firm’s New York-based chief investment officer for global real estate.
An improving U.S. economy is helping the firm exit investments such as IndCor by drawing foreign investors, while at the same time nurturing acquisitions, Caplan said in a telephone interview. Blackstone has seen its real estate assets under management more than triple to about $93 billion since going public in 2007. The firm has raised more than $15 billion for its new global property fund.
“We’re still quite constructive in the U.S.,” Caplan said.
Lenders are continuing to loosen their standards after pulling back in the wake of the financial crisis, providing funds for larger transactions. Commercial-property owners often carry loans equal to 70 percent or more of an asset’s value, making it difficult for the market to function if investors can’t borrow.
‘Sky-High’