Investment Sales Trends... Which are the hottest real estate markets? "New York, Los Angeles, DC, Chicago and South Florida." What are the hottest property types? "CBD office, power centers, garden apartments and single-tenant properties."

That's Bob White of Real Capital Analytics speaking. Based in New York City, Real Capital Analytics tracks investment sales over $5 million nationwide, from marketing to closing. Sales finished strong in 2003 with $40 billion transacted in the last quarter out of $115 billion total for the year.

What are the biggest changes in the investment market over the past ten years? White responds, "The rise of REITs, real estate opportunity funds, Collateralized Mortgage Backed Securities (CMBS) and mezzanine financing." (Mezzanine financing combines elements of debt and equity.)

White sees a growing dichotomy in pricing between the hot markets above and the rest of the country. That's a cautionary observation. With the herd focused on the four major property types (office, industrial, retail and multifamily) in so few hot markets, maybe it's time to look for better performance in other markets and alternative property types, like hotels, senior housing and student housing.

How will the investment market perform in the future? White acknowledges that cap rates have fallen dramatically. Yet asset prices per square foot are relatively flat. The spread relative to 10-year Treasuries is about 375 basis points, compared to 250-300 historically. So, "If you're waiting for cap rates to rise, good luck." (Translation: Don't hold your breath.)

RealComm Discount... PikeNet Dispatch readers can save $100 by using the PikeNet Promotional Code, RC04PIKE1, to register for Realcomm in San Francisco, June 3-4, 2004. One of the highlights will be the Executive Thought Leadership track organized by yours truly. Don't miss it.

--Peter Pike