World’s Top Fund Shuns Office For Retail Properties

Image Source: Frank Vervial

Image Source: Frank Vervia

Blackstone, considered to be the world’s top private equity funds, is leading a new foray into retail properties and shopping centers, as it sheds its portfolio of prime office buildings. Bloomberg News has been covering the recent portfolio shifts of the firmin a series of reports. Continuing from an office building selling spree in 2013, Blackstone has shed $9B in office buildings, including prime properties in top markets like New York.

It’s also no secret that the investment giant has backed off of acquiring rental homes after pillaging the U.S. foreclosure space. So where is this wealthy money machine investing its capital now? According to a May 21st, 2014 report, it is multi-tenant shopping centers, including taking over almost the entire portfolio of another leading trust for $2B in cash.

Surprisingly, Canadians have been prime investors in at least one of the sales of Blackstone’s largest office spaces. Analysts have put this down to a lack of availability of large deals in Canada. Experts say the largest pension funds and other institutions have taken over Canada’s largest projects and are unlikely to let them go any time soon.

A recent Washington DC forum on the U.S. economy and real estate trends saw Chief Economist of the National Association of Realtors forecasting that while Canadians are expected to make up 18% of foreign home buyers in the United States in 2014, this number is declining. Mexican and Chinese buyers are expected to take the place of Canadians who are cashing out and investing back home for better returns.

The DC Real Estate Forum held on May 15th, 2014 painted a bleak outlook for the U.S. economy. GDP is expected to grow at a very moderate pace, while job to population ratios are regressing to 1960’s levels. A variety of other factors including rising rates, home prices, and the 35 and under age group being stuck living with parents due to decreased job prospects and increased debt loads, is expected to keep the U.S. housing market suppressed at least for the next couple of years.

 
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