Commercial Property Investments

Office Towers are Hot Properties for Investors

Office Towers are Hot Properties for Investors

Mike Meisenbach writes on Commercial Real Estate GrowthUntil recently, commercial real estate seemed to be trending away from office towers. In fact, between 2008 and 2012, there was only one office building sale (Google’s headquarters in Manhattan) that hit the $1 billion mark. But all that seems to be changing. These days, tall office buildings are a hot property.

June 2013 appears to have marked the beginning of this new trend. Consider that over the course of a single week:

So, why the sudden craze for office towers? It’s a combination of several factors, actually.

Low interest rates have sent investors scrambling to find high-yield investments, and office buildings (especially those with long-term tenants) in major cities are a pretty safe bet. Commercial mortgage delinquencies have declined, the recession is (hopefully) a thing of the past, and bidding on office tower properties has become very competitive.

(In fact, property values have been rising faster than rental rates, leading some to believe the market may be on the verge of overheating.)

Meanwhile, the market for commercial mortgage-backed securities has grown. This has led to favorable loans for landlords as Wall Street banks have upped the number of new commercial mortgages they’re offering. These mortgages are sold off as bonds, which are quickly snatched up by the investors in search of high-yield investments.

Source: Tall Towers Lure Property Investors (Wall Street Journal)

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RT @EW: ICYMI: Netflix says more #ArrestedDevelopment is in the works: http://t.co/ZbHdbixpKF http://t.co/Lqg5jBp69i

Address of Real Bluth Model Home REVEALED #ArrestedDevelopment: http://t.co/1qNT2TPwz0 http://t.co/gjcWN8U7HL

Art Stable, by Olson Kundig Architects, Seattle, Wash. The live/work loft project includes a seven-s http://t.co/6Oi9pWs1BS

Aros: Federal Center South Building 1202, Seattle, Washington. Commercial Real Estate #commercialre http://t.co/lRX2VhtOZ5

Contemporary chandeleir with quirk at Seattle's The Whale Wins [Restaurant] | Heliotrope Architects http://t.co/FJPMPmle5G

🇺🇸 Happy 4th of July, Seattle! 🇺🇸 #IndependenceDay #July4th http://t.co/pHlhgbvAwo

Broadway by night. http://t.co/toOP3e4BzI

Seattle waterfront http://t.co/TYED2Xa4SQ

RT @AirbnbHelp: We are aware of the 503 error and we're working hard to fix this as soon as possible! Thanks everyone for reporting this!

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RT @EW: ICYMI: Netflix says more #ArrestedDevelopment is in the works: http://t.co/ZbHdbixpKF http://t.co/Lqg5jBp69i
Address of Real Bluth Model Home REVEALED #ArrestedDevelopment: http://t.co/1qNT2TPwz0 http://t.co/gjcWN8U7HL
Art Stable, by Olson Kundig Architects, Seattle, Wash. The live/work loft project includes a seven-s http://t.co/6Oi9pWs1BS
Aros: Federal Center South Building 1202, Seattle, Washington. Commercial Real Estate #commercialre http://t.co/lRX2VhtOZ5
Contemporary chandeleir with quirk at Seattle's The Whale Wins [Restaurant] | Heliotrope Architects http://t.co/FJPMPmle5G
🇺🇸 Happy 4th of July, Seattle! 🇺🇸 #IndependenceDay #July4th http://t.co/pHlhgbvAwo
Broadway by night. http://t.co/toOP3e4BzI
Seattle waterfront http://t.co/TYED2Xa4SQ
RT @AirbnbHelp: We are aware of the 503 error and we're working hard to fix this as soon as possible! Thanks everyone for reporting this!
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