Investors Chase Value Around the World--and Into Utah.

• Position: UB Voices

Each year CBRE publishes its Investor Intentions Survey, a report that reflects the investment sentiment of more than 1,000 major investors worldwide. The document highlights several key topics that are top-of-mind for investors and reports key findings with both national and global significance. Utah is seeing more national and global attention than any other time in its history. Because Utah's market has become more intertwined with worldwide economies, many of the report's hot topics can be directly applied to our local commercial investment market. In this article we will explore some of the report's topics that have directly affected Utah, as well as give a general overview of some of the survey's more significant findings.

Capital Flows Rise in 2017

Global levels of real estate investment activity rose slightly in 2017 to $953 billion from $941 billion in 2016. Cap rates continued to edge down in all regions of the world, reflecting a moderate excess of buyers over sellers. The economic conditions that supported real estate investment in 2017--growth accompanied by low interest rates--are expected to continue generally in 2018. However, in the United States, increasing interest rates will keep cap rates from compressing as they have in recent years.

From a local perspective, Utah's capital activity has followed a similar pattern. The state of Utah reached the highest amount of total investment volume in its history in 2017, where a record-breaking $2.2 billion was achieved, surpassing the previous year's high of $1.87 billion. This was primarily driven by a continued inflow of out-of-state and institutional funds. As national and institutional investors grow weary of compressed cap rates in global/primary markets, Utah offers potentially stronger returns with relatively low risk.

Preferred Asset Types

Investors were asked which property sector they believed would be the most attractive for investment purchases in 2018. Industrial & logistics (I&L) came out on top, followed by office and then multifamily/private rented sector, which was the top sector in the U.S. in terms of investment volume in 2017. Regionally, I&L is also the most popular sector among investors in the Americas.

Locally, despite this heavy interest in I&L investments, limited sale supply has kept volumes in this segment from elevating. Instead, multifamily has taken the lion's share of capital investments in Utah, accounting for $1.1 billion of the total $2.2 billion...