According to an article published by CoStar, commercial real estate powered by gains in Multifamily and Office Buildings drove the CCRSI National Composite Sales Index to close out 2011 with significant increases off the 2011 March lows. The National Composite Index ended 2011 up 0.2% for the year, but 5.5% above its lowest point in March 2011. The Investment Grade and the General Commercial Indices of the CCRSI both displayed similar characteristics with prices declining at the beginning of the year and then rallying midyear with a flat 4th quarter. The final tally for the Investment Grade Index finished the year up 14.6% off the March lows and 3.5% for the entire year.
Numerous analysts published in CoStar, The Wall Street Journal, and other recognized financial publications are predicting continued gains for 2012 with an emphasis on Multifamily and Office Buildings as outperforming.
Where do we go from here? Banks, life companies and pensions are actively coming back into the market now that a bottom appears to have been formed. One publication predicts banks alone will increase commercial lending by over 25% in 2012 over 2011. Expect leverage for commercial to remain between 60% to 75% for Mixed Use, Retail and Office. However, Conventional Multifamily leverage could expand up to 75% on purchases.
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