Cushman & Wakefield’s Davis Reflects on Banner Year for Capital Markets

Mike Davis, Rick Brugge and Michael Lerner Closed 33 Investment Sales Transactions Last Year Valued in Excess of $1.25 Billion

TAMPA, FL, February 14, 2017Cushman & Wakefield Executive Managing Director Mike Davis took time to reflect on current trends in commercial real estate and a banner year for his Capital Markets team and the firm.

Last year, Davis and fellow team members Senior Director Rick Brugge and Senior Director Michael Lerner, closed 33 transactions valued at more than $1.25 billion on nearly 9.0 million square feet of commercial property across the Southeast. According to Davis, the incredibly active investment sales market was fueled by a number of factors. These include:

  • Historically low interest rates
  • Excellent market fundamentals across the nation
  • Investor concerns about the rapid rise in stock and bond valuations
  • Concerns about future inflation
  • The increasing widespread acceptance of commercial real estate as a viable investment vehicle

“While most sectors have performed well, industrial is really the big story in the investment world,” said Davis. “Today, a lot of money is flowing into industrial and the business driver is e-commerce.”

“Our fundamentals are off the chain,” added Davis. “We’ve had record absorption over the last three years, unlike anything we’ve ever seen in the history of industrial real estate. A significant portion of the industrial absorption over the last 36 months has been e-commerce-driven, as product moves off retail shelves and into warehouse and distribution facilities.”

On the office side, Davis and his team have witnessed solid fundamentals and measured growth.

“The key driver in office is the supply side, which is very constrained in most markets, and rents still have to come up somewhere between 10 and 20 percent to justify new construction,” explained Davis. “It is also extraordinarily difficult to get a construction loan and to build an office building today.”

Going forward, Davis believes the proposed policies of President Trump will help sustain capital markets in the near- to mid-term.

“Donald Trump is a real estate guy, so one would think he should be good for commercial real estate,” said Davis. “He’s also talking about stimulating the economy through massive infrastructure spending, and that should drive GDP growth. Those two things should be very good for commercial real estate. The risk, of course, is that interest rate rises don’t outstrip anticipated GDP growth.”

“It’s been an extraordinarily robust time for commercial real estate,” said Davis. “In the investment space, we feel optimistic, and most of the clients we talk to feel very good about the short- and medium-term going forward.”

About Cushman & Wakefield

Cushman & Wakefield is a leading global real estate services firm that helps clients transform the way people work, shop, and live. Our 43,000 employees in more than 60 countries help investors and occupiers optimize the value of their real estate by combining our global perspective and deep local knowledge with an impressive platform of real estate solutions. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $5 billion across core services of agency leasing, asset services, capital markets, facility services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation, and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter.

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