Distressed properties may see uptick in transactions

Distressed properties may see an increase in sales in some areas.

Property management companies interested in commercial real estate may notice a heightened level of distressed properties being sold in the market this year.

Conditions are becoming more attractive for many investors, as more investors look for quality distressed properties in some markets, according to CoStar Group. While distressed property sales are declining in some areas, they are rising in other places.

Overall distressed transactions fell to approximately 10 percent of all transaction volume for the commercial market last year, when it was close to 20 percent in 2011, the news source noted. This was a $16 billion drop year-over-year. Meanwhile, many areas that were hit hard by the recession still have a sizable number of properties being sold in the market. Specifically, there was a market share of property sales volume that reached 30 percent in Georgia, Michigan and Nevada. Many areas on the East Coast and central part of the country experienced increases in dollar volume, as well.

"If you can find a good distressed deal at a 'distressed' price, buy it," Luke Wood, partner at Haverwood Management, told the news source. "Good distressed assets are selling at market value (or above market value, depending on your opinion) at this point in the market recovery. Equity is looking for limited parking spots and we are seeing many distressed assets sell at non-distressed prices to optimistic buyers, eliminating the high returns sought after for distressed deals."

Two of the most popular sectors with investors when it comes to acquiring distressed property is the retail and multifamily markets, the report added. However, while interest is elevated for both sectors, only retail properties that were distressed had an increase. This sector saw a jump of 4 percent last year compared to 2011.

Apartment market may see slower rent growth
Healthy, occupied apartment complexes should still see rental growth this year, but the figures may not be as strong as in previous years.

Overall growth may stay at a high level in the Silicon Valley area, but it could begin to lose steam in East Coast markets such as New York, Boston and Washington, D.C., according to a separate report from CoStar Group. This is partly because of significant occupancy levels throughout much of the country. The level of rental growth averaged more than 3 percent higher than the peak in the previous economic cycle.

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