The land and infrastructure deal space has been one of the few bright spots across all sectors given the effects of COVID-19. United States Q2 Deal Volume for the sector fell 16% over Q2 2019, which was the second-lowest decline across all sectors. Hospitality and Oil & Gas were two of the hardest-hit sectors, with their deal volumes declining 50% over the same period. With investors constantly seeking for distressed opportunities in the short-term, and with many investors currently holding onto a lot of dry powder, deal activity will assuredly increase in the near future.
Another positive for the industrial real estate space is that CMBS loan delinquencies are below 1.0%, per Fitch Ratings. Other areas like hotels and retail have delinquency percentages of up to 11.5%. This signifies strength and confidence in the industrial space, and when that is combined with forthcoming reductions in governmental aid, there is a remarkable opportunity for investors to provide capital and increase deal flow.
One senior vice president, Robbie McEwan, at Coldwell Banker Richard Ellis (CBRE), one of the largest land brokers in Florida, has stated that he’s seen five to ten times the amount of calls inquiring about buying land this summer when compared to last summer. Investors are rushing towards land deals to place their money in safe assets during the current economic uncertainty driven by COVID-19. Investing in land is a great asset to invest in as its taxes are typically low and its value tends to rise. Near McEwan’s area, property market value has risen 6.3% in just the last year in Orange County, FL.
The time is currently ripe for land and infrastructure deals, and keen investors are taking advantage of investing money during the current dip in valuations across the board in the United States.
Sources: PWC, Orlando Business Journal