‘Near record’ amounts of capital are sitting idly on the sidelines amid economic uncertainty, and how (and how quickly) it’s deployed this year will be “major factors” in overall sales volume, according to new research from Colliers.
In a new report, the firm says that value-add, opportunistic, and debt capital look to be the most active, with debt plays yielding “equity-like returns.”
“Liquidity can be found, but from different sources,” the report notes.
Investors are turning to defensive strategies, with multifamily and industrial garnering the most activity as “safe harbors” due to strong fundamentals and durable cash flows. Among alternative assets in Colliers’ survey, life science, data centers, and student housing ranked first, second, and third due to “demographically driven upside and strong fundamentals,” which analysts predict will continue to draw investor interest.
Grocery-anchored retail is also expected to remain resilient while luxury hotels have posted “incredible” fundamentals.
And as for office, “trophy properties are vastly outperforming all others, demonstrating the need for upgrading and occupiers’ focus on ESG-compliant assets,” the report notes. “This need for new product will be difficult to meet, with capital investment preferring to upgrade existing assets. Conversions, repositioning, and recapitalizations will all be common themes throughout the year as the office sector evolves. Distress will emerge.”