This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Commercial Real Estate On The Rise

Stocks in this article: CIT

Commercial real estate markets on either coast are outperforming assets in the mid-U.S. because they are home to gateway cities that trade with Asia and Europe. The hottest of these markets right now is the New York metropolitan area, as it’s experiencing an 8-year low in the supply of residential real estate; but other national markets may provide better risk adjusted returns, according to Matt Galligan, President of CIT Real Estate Finance at CIT Group Inc. (NYSE: CIT) cit.com, a leading provider of financing and advisory services to small businesses and middle market companies. Galligan further discusses the opportunities and challenges in the sector, the role of private equity firms in the industry and trends to watch in the “2013 Commercial Real Estate Sector Outlook,” the latest in a series of in-depth executive Q&As featured in CIT’s Executive Insights series ( cit.com/executiveinsights).

Multifamily Market – Opportunities and Potential Challenges

According to Galligan, there are plenty of opportunities across all markets, however, there’s some concern with the Class A new multifamily market. “If interest rates increase, or as residential mortgage lending thaws, providing home loans to first-time buyers, it could put pressure on that asset class where capitalization rates are incredibly low,” he said. “There are also opportunities with Class B multifamily assets in the Midwest, where the capitalization rates are higher and demand is quite strong. Additionally, convenience oriented strip shopping centers in the Midwest tend to hold their value because the threat of a new supply is not great.”

Private Equity Firms Now Major Players

In sharp contrast to institutional ownership in previous years, where insurance companies and pension funds had become the largest acquirers of real estate in the U.S., private equity firms are now buying real estate investment trusts (REITs) and repositioning them into private companies. “A great example is the Blackstone Group’s recent purchase of Duke Realty’s suburban office holdings,” said Galligan. “As a result, Blackstone has become a major player in suburban office space in the Midwest and suburban Atlanta markets.”

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,890.30 +85.50 0.48%
S&P 500 2,072.51 +1.86 0.09%
NASDAQ 4,773.9560 +8.5760 0.18%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs