Every Friday, first-year MBA students attend the Contemporary Topics in Real Estate course. As part of this class, the Graaskamp Center often invites guest speakers to give presentations to students. September 27th’s class was a typical example of how the Center closes its week: a high-level presentation from an industry insider. On this particular day, Steve Williams of Real Capital Analytics, Inc. (RCA) gave an overview of his company and discussed the current trends in the global real estate market.
RCA is a research and consulting firm focused exclusively on the commercial real estate (CRE) investment market. RCA provides valuable insight on CRE through its collection, analysis, and interpretation of transactional data for asset sales and financings. Their monthly sector reports (US, UK, European) and global trend reports are highly held and heavily relied upon by all parties in the industry.
Mr. William’s overview touched on the difficulties RCA faces with data standardization, for instance the methodology behind square footage measurement, and its effects on the comparison of assets across varying markets and regions. As much as Mr. Williams tried to shy away from discussing the economic downturn, he could not help but theorize that a partial contributor was the increased focus on cap rates and decreased focus on the micro-analysis of NOI.
“Sure that’s a great cap rate,” Mr. Williams quipped. “But which NOI are you capping.”
Mr. Williams also discussed RCA’s current initiatives, which include an increasing number of transaction and price-based indices related to 10-year repeat sales and a trend tracker focused on global markets. He also described RCA’s German Debt Initiative, to be launched at Expo Real, which will offer transparency into the highly-veiled world of German lenders.
With respect to global real estate investment, Mr. Williams believes that momentum is building. Although, he still believes cross-border investment will remain limited to a few, large investors due to the high barriers to entry, in particular the ability to asset manage across great distances and language barriers. RCA’s analytics show Q2-13 as a turning point for risk, and investor appetite indicates a clear migration of capital further outward on the risk spectrum. For instance, US regional markets are emerging as international investors begin to look outside core US markets, and exorbitant prices in London have caused investors to gaze outward to cities like Manchester, Dublin, and Glasgow.
Jay Usner is a first-year MBA student in the James A. Graaskamp Center for Real Estate. Jay is from Austin, TX where he previously managed real estate investments for institutional investors. Post-graduation, Jay hopes to use the knowledge he gains as an MBA to pursue a career in acquisitions or portfolio management.