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How much competition is there to acquire commercial properties?

We are looking at acquiring a medical office building in New York City. We would really like to acquire the property, but are also mindful of not overpaying for the asset. With that in mind, it would be helpful for us to have more of an understanding of the competition in the marketplace. How competitive is the bidding on commercial assets at the moment? Are there certain asset classes that are more competitive than others?

  • Farazad Investments
    May 18, 2018

    There is a lot of competition at present for acquisitions due to the limited opportunities. Furthermore, equity investors requiring to deploy capital meet with their investors to return targets. If you view the opportunity is something that you wish to add to your portfolio and the economics (returns, IRR, etc.) make sense, maybe increasing your offering price would increase the seller's interest to sell to you.

  • Marcus & Millichap, Global Capital Team
    May 17, 2018

    It is extremely competitive. There are always multiple bidders for any asset. NYC is probably the most efficient market in the world.

  • Getech Law LLC
    May 19, 2018

    For real estate, it depends on the location. Different locations have different demands. It is hard to give a general statement.

  • Marcus & Millichap
    May 18, 2018

    New York City is a very liquid marketplace in all property types, so you would need to have the capital in the states and ready to deploy once you identify the property. Typical closings take 30 to 90 days maximum in NYC. Extensions can be added if required after a hard, non-refundable deposit of 5 percent to 10 percent of purchase price. It would be helpful to understand your investment return expectations in terms of IRR/cap rate.

  • Greenberg Traurig, LLP
    May 19, 2018

    Very competitive in New York City. Unless there is widespread concern for a particular asset, there is a lot of money out there looking to invest in good assets in New York, and there is a scarcity of good properties for sale at sensible returns compared to investor demand.

  • SPC Advisors, LLC
    May 23, 2018

    Brokers work hard to drum up interest in commercial properties. Some sales have many potential buyers engaging in multiple rounds of bids. I have seen the competition strongest in trophy buildings. The interest in industrial and medical office is strong now. Hotels are not so much and other categories are varied. In order to really answer your question I would have to understand the product type, price range and market you are looking at. New York is somewhat less competitive than it has been, but that doesn't mean that certain assets won't gather significant interest.