July 24, 2002—The supply of capital available for real estate is “overwhelming,” according to Cushman & Wakefield Executive Managing Director Tim Welch. As a result, the investment market is more competitive than it has been in two years.
“There is a real tension in the market,” Welch said. “The leasing market is relatively weak because of the amount of available sublease space, layoffs and the slow economy. Conversely, there is a tremendous amount of capital available for real estate investment.”
The reason so much capital has become available is the relative strength of real estate as an investment vehicle. “When you compare real estate, which has been getting 8-10 percent returns, to the low returns in the bond market and the volatility of the stock market, it is a good alternative,” Welch said.
Welch pointed out that REITs (real estate investment trusts) have outperformed the Dow and the Standard & Poors 500 consistently over the last 12-15 months.
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