{"id":1004043217,"date":"2012-07-18T11:41:12","date_gmt":"2012-07-18T19:41:12","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004043217"},"modified":"2022-12-05T14:30:07","modified_gmt":"2022-12-05T22:30:07","slug":"small-is-beautiful","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/small-is-beautiful\/","title":{"rendered":"Small Is Beautiful"},"content":{"rendered":"<p style=\"text-align: left\" align=\"center\"><a href=\"https:\/\/www.commercialsearch.com\/news\/newsletters\/capitalmarkets-newsletter\/investment-column\/small-is-beautiful\/1004043217.html\/attachment\/bob_bach_480x270\" rel=\"attachment wp-att-1004043200\"><img loading=\"lazy\" decoding=\"async\" data-attachment-id=\"1004043200\" data-permalink=\"https:\/\/www.commercialsearch.com\/news\/pittsburgh-versus-phoenix\/bob_bach_480x270\/\" data-orig-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2012\/07\/Bob_Bach_480x270.jpg\" data-orig-size=\"480,270\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;}\" data-image-title=\"Bob_Bach_480x270\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2012\/07\/Bob_Bach_480x270.jpg?w=480\" class=\"alignright size-thumbnail wp-image-1004043200\" title=\"Bob_Bach_480x270\" src=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2012\/07\/Bob_Bach_480x270.jpg\" alt=\"\" width=\"150\" height=\"150\" \/><\/a>By Bob Bach, National Director of Market Analytics, Newmark Grubb &amp; Knight Frank<\/p>\n<p>The long-awaited increase in secondary market transactions is starting to happen. Through the first half of 2012, CoStar says that office sales in markets outside the top six (New York, Washington, D.C., San Francisco, Boston, Chicago and Los Angeles) accounted for 45 percent of total activity, up from 36 percent in 2012 and identical with the 2003-2007 average \u2013 the boom years of the last expansion cycle. Among the high-profile office transactions closed this year in smaller markets are the Hearst Tower and Fifth Third Center in Charlotte, which went for $245 and $175 million, respectively, to a REIT and an equity fund; Huntington Center in Columbus, sold to a large private investor for $177 million; and Chase Tower in Indianapolis, picked up by a REIT for $201 million.<\/p>\n<p>Some of this is related to the slow but broad improvement in leasing market conditions, with secondary office markets attracting 77 percent of total net absorption in the second quarter and 98 percent in the first quarter, according to CoStar. But mostly this is due to \u201cyield fatigue\u201d: Cap rates have tightened so much in supply-constrained coastal markets, particularly CBDs, that buyers are taking a pass and chasing higher yields in secondary markets.<\/p>\n<p>Larger transactions priced at $20 million and higher command lower cap rates than transactions below that threshold: 6 percent versus 7.5 percent in the second quarter. But both trend lines have been coming down in recent quarters, indicating that investors are warming to lower-priced assets \u2013 some combination of Class B or value-add deals, smaller-size properties and assets in secondary markets. This is ironic in that commercial real estate investors appear willing to assume more risk at a time when global investors\u2014spooked by the euro zone financial crisis, the fiscal cliff in the United States and slowing economies across the globe\u2014are fleeing to low-risk assets like U.S. Treasuries, where the yield on the 10-year note is hovering around 1.5 percent, near record lows. Low interest rates translate into greater availability and more attractive terms for mortgage loans, which has been one reason behind the growing volume of transactions this year \u2013 up 21 percent year-to-date through May for all commercial property types.<\/p>\n<p>Economic conditions have worsened for a third consecutive summer, putting the United States perilously close to a recession. This would tend to re-focus investors on the best assets in primary markets and dampen interest in secondary markets. But as long as the economy continues to defy the prodigious headwinds, secondary markets will gain traction with investors.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>By Bob Bach, National Director of Market Analytics, Newmark Grubb &amp; Knight Frank:<\/p>\n<p>The long-awaited increase in secondary market transactions is starting to happen. <\/p>\n","protected":false},"author":1395,"featured_media":1004043200,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[37301],"tags":[],"class_list":["post-1004043217","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v28.0 (Yoast SEO v28.0) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Small Is Beautiful - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/small-is-beautiful\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Small Is Beautiful\" \/>\n<meta property=\"og:description\" content=\"By Bob Bach, National Director of Market Analytics, Newmark Grubb &amp; Knight Frank: The long-awaited increase in secondary market transactions is starting to happen.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/small-is-beautiful\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2012-07-18T19:41:12+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-12-05T22:30:07+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2012\/07\/Bob_Bach_480x270.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"480\" \/>\n\t<meta property=\"og:image:height\" content=\"270\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Bob Bach\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/small-is-beautiful\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/small-is-beautiful\\\/\"},\"author\":{\"name\":\"Bob Bach\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/#\\\/schema\\\/person\\\/b5d33e145e37b6c8b4d4ad3835a86ff6\"},\"headline\":\"Small Is Beautiful\",\"datePublished\":\"2012-07-18T19:41:12+00:00\",\"dateModified\":\"2022-12-05T22:30:07+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/small-is-beautiful\\\/\"},\"wordCount\":422,\"commentCount\":0,\"image\":{\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/small-is-beautiful\\\/#primaryimage\"},\"thumbnailUrl\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/wp-content\\\/uploads\\\/sites\\\/46\\\/2012\\\/07\\\/Bob_Bach_480x270.jpg\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"CommentAction\",\"name\":\"Comment\",\"target\":[\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/small-is-beautiful\\\/#respond\"]}]},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/small-is-beautiful\\\/\",\"url\":\"https:\\\/\\\/www.commercialsearch.com\\\/news\\\/small-is-beautiful\\\/\",\"name\":\"Small Is Beautiful - 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