{"id":1004674588,"date":"2023-08-02T03:54:12","date_gmt":"2023-08-02T11:54:12","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004674588"},"modified":"2023-08-09T23:09:41","modified_gmt":"2023-08-10T07:09:41","slug":"these-asset-classes-stood-out-in-dla-pipers-mid-year-outlook","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/these-asset-classes-stood-out-in-dla-pipers-mid-year-outlook\/","title":{"rendered":"These Asset Classes Stood Out in DLA Piper\u2019s Mid-Year Outlook"},"content":{"rendered":"
\"Barbara<\/a>

Barbara Trachtenberg, Co-Vice Chair of the US Real Estate practice, DLA Piper. Image courtesy of DLA Piper<\/em><\/p><\/div>\n

Like many in the commercial real estate sector, the real estate attorneys at DLA Piper<\/strong> have seen a slower market in the first half of 2023 as lingering inflation, rising interest rates and maturing loans are making investors and lenders cautious, resulting in lower transaction volumes and reduced values for many asset classes.<\/p>\n

But deals are getting done and the law firm\u2019s annual Mid-Year US Real Estate Trends Report<\/em> found most of the activity has been in the purchase and sale of multifamily housing, particularly the senior housing segment, and in the industrial sector.<\/p>\n

As the firm\u2019s recent State of the Market survey<\/a><\/em> predicted, industrial properties, including logistics hubs, warehouses and cold storage facilities, are attractive investments in the current market. The firm\u2019s real estate group also saw an increase in retail, hotel and data center deals in the first half of 2023. Life science deals slowed, mainly due to a venture capital crunch and possible concerns of overbuilding in recent years. Although the office sector continues to struggle, office deals represented 12 percent of the transactions handled by DLA Piper in the first six months of the year, compared to 9 percent in the first half of 2022.<\/p>\n

\n

READ ALSO<\/strong>: How Will Office Space Values Fare in 2030?<\/a><\/p>\n

\n

\u201cThe uptick in office I thought was very interesting,\u201d Barbara Trachtenberg, co-vice chair of the US Real Estate practice at DLA Piper, told Commercial Property Executive<\/em>. \u201cI think that shows people are trying to figure out how to reposition their office, how to refinance their office, maybe redo the capital stack.\u201d<\/p>\n

While the percentage of deals done in the first half of 2023 was down slightly from the same time in 2022, multifamily was still the top asset class handled by DLA Piper, according to the report.<\/p>\n

\u201cMidway through 2023, multifamily properties, including apartment complexes, student housing and mobile home communities, continue to drive a sizable portion of our acquisition and disposition work,\u201d the report stated.<\/p>\n

Multifamily represented 32 percent of the firm\u2019s deals followed by industrial (25 percent); office (12 percent); other (9 percent); senior housing (6 percent); retail and hotel (4 percent each); data centers and medical office (3 percent each) and life science (1 percent).<\/p>\n

\"Acquisition<\/a>

Acquisition and disposition trends. Chart courtesy of DLA Piper<\/em><\/p><\/div>\n

Trachtenberg said data centers are a small segment of the overall real estate market, but there has been activity in the first half of the year, both at DLA Piper and elsewhere. She said people still have confidence in those investments.<\/p>\n

\u201cAI (artificial intelligence) is creating a need for more cloud space, which means you need more data center space,\u201d she said.<\/p>\n

Inflation, interest rate impacts<\/strong><\/h2>\n

Trachtenberg said the overall CRE deal volume for the first half of the year is \u201cnowhere near as slow as during the global financial crisis but volume is definitely down.\u201d<\/p>\n

She said the rise of inflation\u2014followed by the Federal Reserve\u2019s actions to tame it by raising interest rates<\/a>\u2014tracked with the slowdown in transactions.<\/p>\n

\u201cOnce the Fed started getting aggressive with interest rates, that\u2019s when people started to say I don\u2019t know how to price this. There\u2019s inflation, cap rates are moving, the interest rates are going up. How do I sit down today and say what I think this property is really worth.\u201d<\/p>\n

Trachtenberg said there is plenty of capital available for deployment but the bid-ask gap continues to be a problem resulting in many investors waiting on the sidelines.<\/p>\n

For those buyers who are going after deals, Trachtenberg said they are being more demanding resulting in two new trends in the report\u2014financing contingencies and longer representation and warranty survival periods.<\/p>\n

\u201cBuyers who are willing to pay more want to get what they\u2019re paying for and I think that\u2019s bearing out when you see longer rep and warranty survival periods or when you\u2019re starting to see, albeit it\u2019s relatively small, but starting to see financing contingencies,\u201d Trachtenberg told CPE.<\/em><\/p>\n

Because of the reduced availability of capital this year, DLA Piper added financing contingencies to the list of tracked metrics for the report to see what percentage of acquisitions were contingent on either the buyer obtaining new financing or assuming the existing financing on a property. The firm found it\u2019s still rare, with more than 94 percent of the transactions proceeding without contingencies.<\/p>\n

But Trachtenberg said seeing them at all was surprising and something she had not encountered at all in the past several years.<\/p>\n

\u201cIf we went back and looked at all our deals in 2021, that number would be zero,\u201d she said.<\/p>\n

Trachtenberg said they began to notice a trend toward 270-day rep\/warranty survival periods in 2022 and it has continued into 2023 with nine months being the most frequent rep\/warranty period in the purchase and sale agreements they negotiated during first half of the year.<\/p>\n

In 2021, she said only 23 percent of the deals negotiated had a nine-month survival period.<\/p>\n

\u201cNow we\u2019ve got 67 percent at nine months or more,\u201d she said. \u201cIt\u2019s significant. It\u2019s not just an increase on the nine-month, but also an increase on the year or more so it\u2019s been an interesting dynamic.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Insights into what\u2019s driving investment now from the global law firm\u2019s annual update.<\/p>\n","protected":false},"author":1068,"featured_media":1004674629,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,22251,21748,21783,23891,21742,21747],"tags":[33026],"class_list":["post-1004674588","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-in-focus","category-industrial","category-investment","category-national","category-latest","category-office","tag-dla-piper"],"acf":[],"yoast_head":"\nThese Asset Classes Stood Out in DLA Piper\u2019s Mid-Year Outlook - Commercial Property Executive<\/title>\n<meta name=\"description\" content=\"DLA Piper\u2019s annual Mid-Year US Real Estate Trends Report finds economic headwinds continue to keep transaction volumes down.\" \/>\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\/these-asset-classes-stood-out-in-dla-pipers-mid-year-outlook\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"These Asset Classes Stood Out in DLA Piper\u2019s Mid-Year Outlook\" \/>\n<meta property=\"og:description\" content=\"DLA Piper\u2019s annual Mid-Year US Real Estate Trends Report finds economic headwinds continue to keep transaction volumes down.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/these-asset-classes-stood-out-in-dla-pipers-mid-year-outlook\/\" \/>\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=\"2023-08-02T11:54:12+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2023-08-10T07:09:41+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2023\/08\/Barbara-Trachtenberg-featured.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"433\" \/>\n\t<meta property=\"og:image:height\" content=\"331\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Gail Kalinoski\" \/>\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\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/these-asset-classes-stood-out-in-dla-pipers-mid-year-outlook\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/these-asset-classes-stood-out-in-dla-pipers-mid-year-outlook\/\",\"name\":\"These Asset Classes Stood Out in DLA Piper\u2019s Mid-Year Outlook - 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