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Some institutions are scared of CRE, leaving openings for nimbler investors

 

Institutional investors are selling more commercial properties than they're buying, presenting something of an opportunity for smaller and privately held firms to snap up high-quality properties and others that might have upside potential beyond a large institution's ability to execute, some experts say.

 

“We definitely have a risk-off mentality,” United Parcel Service Inc.’s pension fund portfolio manager Judy McMahan told the Wall Street Journal. “We’re being careful.”

 

Rising interest rates, which make bonds look more profitable compared to real estate, and a perceived oversupply are the main factors driving institutional investors away from commercial properties, observers say.

 

Commercial real estate sales volume fell by $58.3 billion, or 11 percent in the first half of 2016, according to Real Capital Analytics, marking the first dip since 2009.

 

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