Commercial real estate assets in major markets such as New York City, Washington, DC, Boston, Chicago, Los Angeles and San Francisco have experienced a strong rebound in values and are being transacted near, or above, their pre-recession peaks. In contrast, real estate assets outside of major markets and within certain asset classes are experiencing more limited demand, often causing values to remain substantially below the pre-recession peak.
Higher prices on real estate assets have been supported by a combination of low interest rates and increased demand from foreign and domestic capital sources as investors continue to search for high-quality real estate investments that provide attractive returns in comparison to low returns from fixed-income investments. The market preference for post-recession real estate investment has been in the major markets where underlying demand is strong, values are durable, and there are high barriers to entry.
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