More than $350 billion in commercial real estate loans could move this year and next, creating an opportunity for the distressed retail property asset pipeline to begin to move, Colliers International said in its U.S. Retail Highlights: 2012 Outlook report.
The Seattle-based CRE firm said there will be opportunities for retail investment of trophy assets trading at low cap rates in addition to a large pool of marginal or low- to no-cash flow assets that cannot be refinanced. The report says these assets will either default or end up in fire sale, creating opportunities for investors.
Another major trend is the rapid change in how retailers choose to use brick-and-mortar assets as more consumers turn to online retail.
All of the changes impacting retail will create a wild ride for equities in retail real estate investment, Colliers said.
"U.S. equities markets will continue to react to news on any and all economic indicators, including ongoing news of store closings," Colliers International said. "The angle of these reports will vacillate between smart consolidation of poor-performing assets to a possible harbinger of corporate economic trouble."
Foreign investors are expected to seek a place to park their money, and Colliers said U.S. shopping centers or broken land deals in high-growth markets may prove attractive. Nonperforming real estate loans will remain a burden on banks, but regional banks have slowly picked up their commercial lending, according to Colliers.
"As mortgage production ramps up, investors will see banks being more competitive, but with far more stringent underwriting standards," Colliers noted.