“Emerging Trends in Real Estate 2013”
The Emerging Trends in Real Estate series of publications is sponsored by PricewaterhouseCoopers and the Urban Land Institute and provides an outlook on trends in real estate: investment and development; finance and the capital markets; property sectors and locations; and issues affecting the real estate industry.
Emerging Trends is acknowledged as the real estate industry’s most highly regarded, widely read, and most predictive forecast; 2013 marks the 34th annual edition focused on the North American real estate industry as well as the 10th annual edition focused on the United Kingdom and Europe and the 7th annual edition focused on the Asia Pacific region.
What makes Emerging Trends unique is its research protocol which includes one-on-one interviews combined with on-line, and in-print surveys, with a wide array of real estate industry participants including: public and private owners and developers; institutional investors, real estate advisors, and service providers and; conventional and securitized lenders. This year, more than 900 persons participated in the interview, and survey, process.
Members of the Emerging Trends team are “on the road”, presenting the substance of the report to ULI District Councils; copies of the report are normally distributed to attendees at District Council presentations. If you will be unable to attend your District Council presentation or if your District Council has not scheduled a program for this year, you can access the report on-line at: www.uli.org/emergingtrends.
Monday’s Numbers
The Trepp, LLC survey showed commercial mortgage spreads coming in a few basis points during the survey period as lenders continue to compete aggressively for new business.
Asking Spreads over U.S. Treasury Bonds in Basis Points (10-year Commercial and Multifamily Mortgage Loans with 50% to 59% Loan-to-Value Ratios) | ||||||
| 12/31/09 | 12/31/10 | 12/31/11 | 10/19 | Week Earlier | Month Earlier |
Office | 342 | 214 | 210 | 221 | 225 | 223 |
Retail | 326 | 207 | 207 | 205 | 215 | 215 |
Multifamily | 318 | 188 | 202 | 198 | 210 | 201 |
Industrial | 333 | 201 | 205 | 206 | 216 | 215 |
Average Spread | 330 | 203 | 205 | 208 | 214 | 214 |
10-Year Treasury | 3.83% | 3.29% | 1.88% | 1.75% | 1.69% | 1.64% |
The Cushman & Wakefield Equity, Debt, and Structured Finance Commercial Mortgage Spread monthly survey of commercial mortgage spreads showed spreads for 10-year, fixed rate mortgages, coming in a uniform 5 basis points across all property sectors and terms over the past 30 days.
Property Type | Mid-Point of Fixed Rate Commercial Mortgage | ||||
| 12/31/10 | 6/28/12 | 7/26/12 | 9/3/12 | 9/27/12 |
Multifamily - Non-Agency | +270 | +245 | +245 | +240 | +235 |
Multifamily – Agency | +280 | +225 | +225 | +225 | +210 |
Regional Mall | +280 | +300 | +295 | +290 | +285 |
Grocery Anchored | +280 | +295 | +290 | +285 | +280 |
Strip and Power Centers | +320 | +315 | +310 | +305 | |
Multi-Tenant Industrial | +270 | +305 | +300 | +295 | +290 |
CBD Office | +280 | +300 | +295 | +285 | +280 |
Suburban Office | +300 | +315 | +315 | +305 | +300 |
Full-Service Hotel | +320 | +360 | +360 | +360 | +355 |
Limited-Service Hotel | +400 | +370 | +370 | +370 | +365 |
5-Year Treasury | 2.60% | 0.69% | 0.57% | 0.68% | 0.64% |
Source: Cushman & Wakefield Equity, Debt, and Structured Finance. | |||||
Property Type | Mid-Point of Fixed Rate Commercial Mortgage | ||||
| 12/31/10 | 6/28/12 | 7/26/12 | 9/3/12 | 9/27/12 |
Multifamily - Non-Agency | +190 | +220 | +220 | +210 | +205 |
Multifamily – Agency | +200 | +200 | +210 | +210 | +195 |
Regional Mall | +175 | +245 | +235 | +230 | +225 |
Grocery Anchor | +190 | +235 | +230 | +225 | +220 |
Strip and Power Centers | +255 | +250 | +245 | +240 | |
Multi-Tenant Industrial | +190 | +260 | +255 | +250 | +245 |
CBD Office | +180 | +250 | +245 | +235 | +230 |
Suburban Office | +190 | +265 | +265 | +260 | +255 |
Full-Service Hotel | +290 | +290 | +290 | +290 | +285 |
Limited-Service Hotel | +330 | +310 | +310 | +310 | +305 |
10-Year Treasury | 3.47% | 1.58% | 1.42% | 1.64% | 1.64% |
Source: Cushman & Wakefield Equity, Debt, and Structured Finance. | |||||
Property Type | Mid-Point of Floating-Rate Commercial Mortgage | ||||
| 12/31/10 | 6/28/12 | 7/26/12 | 9/3/12 | 9/27/12 |
Multifamily – Non-Agency | +250-300 | +200-260 | +200-260 | +200-260 | +200-260 |
Multifamily- Agency | +300 | +220-265 | +220-265 | +220-265 | +220-265 |
Regional Mall | +275-300 | +210-275 | +210-275 | +210-275 | +210-275 |
Grocery Anchored | +275-300 | +210-275 | +210-275 | +210-275 | +210-275 |
Strip and Power Centers | +225-300 | +225-300 | +225-300 | +225-300 | |
Multi-Tenant Industrial | +250-350 | +235-305 | +230-305 | +230-305 | +230-305 |
CBD Office | +225-300 | +225-300 | +225-300 | +225-300 | +225-300 |
Suburban Office | +250-350 | +250-325 | +250-325 | +250-325 | +250-325 |
Full-Service Hotel | +300-450 | +275-400 | +275-400 | +275-400 | +275-400 |
Limited-Service Hotel | +450-600 | +325-450 | +325-450 | +325-450 | +325-450 |
1-Month LIBOR | 0.26% | 0.24% | 0.24% | 0.24% | 0.24% |
3-Month LIBOR | 0.30% | 0.47% | 0.46% | 0.43% | 0.43% |
* A dash (-) indicates a range. | |||||
Source: Cushman & Wakefield Equity, Debt, and Structured Finance. | |||||
Year-to-Date Public Equity Capital Markets
DJIA (1): +7.28%
S & P 500 (2): +12.27%
NASDAQ (3): +14.69%
Russell 2000 (4):+9.77%
Morgan Stanley U.S. REIT (5):+9.72%
(1) Dow Jones Industrial Average. (2) Standard & Poor’s 500 Stock Index. (3) NASD Composite Index. (4) Small Capitalization segment of U.S. equity universe. (5) Morgan Stanley REIT Index.
U.S. Treasury Yields | |||
12/31/10 | 12/31/11 | 10/27/12 | |
3-Month | 0.12% | 0.01% | 0.11% |
6-Month | 0.18% | 0.06% | 0.15% |
2 Year | 0.59% | 0.24% | 0.30% |
5 Year | 2.01% | 0.83% | 0.76% |
7 Year | 1.19% | ||
10 Year | 3.29% | 1.88% | 1.75% |
Key Rates (in Percentages) | |||||
Current | 1 Mo. Prior | 3 Mo. Prior | 6 Mo. Prior | 1 Yr. Prior | |
Fed Funds Rate | 0.17 | 0.17 | 0.06 | 0.14 | 0.07 |
Federal Reserve Target Rate | 0.25 | 0.25 | 0.25 | 0.25 | 0.25 |
Prime Rate | 3.25 | 3.25 | 3.25 | 3.25 | 3.25 |
US Unemployment Rate | 7.80 | 8.10 | 8.20 | 8.20 | 9.00 |
1-Month Libor | 0.21 | 0.22 | 0.25 | 0.24 | 0.25 |
3-Month Libor | 0.31 | 0.36 | 0.45 | 0.47 | 0.42 |
