In the first half of the year, sales of commercial properties in the Orange County market rose 12% year-over-year, nearly reaching $3.5 billion and bucking regional and national trends of moderated activity. An increase in hotel investment was the main driver of the rise in volumes, including significant gains in the industrial, retail and senior housing sectors. Office and multifamily investment was nearly on par with year-earlier totals. Private buyers accounted for over three-quarters of overall investment, continuing the trend away from institutional investment as a crowded market has led to a larger number of smaller deals.
Although investors will retain a strong appetite for real estate this year in a low interest rate climate, investment activity is projected to ease slightly due to tight pricing and limited availability of investable stock. Most investors are primarily focused on gateway cities and have similar investment criteria, so the market has become overcrowded, leading to very tight yields. It’s anticipated that investors will get more creative in formulating investment strategies this year in order to achieve target returns, including investment in alternative sectors, such as senior housing, student housing, data centers, self-storage, and “last mile” facilities.
— Analysis by CBRE
