Good News Friday - June 29, 2012
Good News Comes In Threes
Real Capital Analytics released its data and analysis for May, and indeed, cap rates have been drifting lower for most property types as we thought they would. Office, industrial, retail and apartment cap rates in May were lower than they were a year ago and at the end of last year despite investors' growing interest in riskier assets and markets, which would tend to put upward pressure on average cap rates. Real estate remains a favored asset class.
Secondly, new orders for durable goods rose 1.1% in May following two months of decline. Non-defense capital goods orders excluding aircraft, a proxy for business spending, rose 1.6%. The manufacturing sector, although it has slowed, continues to expand - a leading indicator for warehouse demand.
And finally, setting asid the strong feelings over the Supreme Court's decision to uphold the Affordable Care Act, real estate investors cheered. The FTSE NAREIT Health Care Property Sector Index (FNHEA) jumped 1.5% yesterday, beating the FTSE NAREIT All Reits Index (FNAR), up 0.9%, and the S&P 500, which slipped 0.2%.
Have a great weekend.
SVP, Chief Economist
Grubb & Ellis