Spring arrived right on schedule this year and with the lengthening of daylight hours, there has been a palpable lifting of the collective dark mood hanging over the real estate community. It was as though our industry was emerging metaphorically from a long, dreary winter malaise. Like everyone affected by “cabin fever,” our colleagues in the industry had become increasingly restless, bored, angry and frustrated by the relentless bad news of the past two years, and the lack of conviction to make new investments. The past few weeks have given rise to a discernable change in the mood. Suddenly, deal flow is improving and we continue to hear that “deals are making sense.”
The market for stable assets with secure income is quite frothy, with anecdotes of pre-crash pricing levels and numerous competitive bidders. Every day we read about assets being acquired at prices that are surprisingly high. Debt is once again becoming plentiful, and unlike before, it is now available in size. One need only look to the GGP transaction to note that lining up several billion dollars of debt and equity is no longer impossible. In the past few weeks alone, we learned of three major office building transactions in Manhattan, at much lower cap rates than anyone would have considered just a few months ago.
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