Investors Favor Reliability of Office RE

While several notable apartment transactions in major cities point to strong activity in the multifamily sector at the end of this year, property investors surveyed by PricewaterhouseCoopers said they're looking back to the office real estate market for solid returns. Real estate experts expect investors to lean toward major cities and strong secondary markets such as Austin, Minneapolis, and Seattle.

Respondents in the latest PwC Real Estate Investor Survey cited attractive office capitalization rates and the ability to retain existing tenants while pushing rental rates higher as market conditions improve as a key draw while the office sector recovers. An increasing number of office tenants are renewing leases, while prospects for rent growth are also improving, according to the consulting and accounting firm's survey.

The majority of investors who were surveyed view commercial real estate as fairly priced and a solid investment. The sluggish U.S. recovery, which has yet to reach all secondary markets, makes buying opportunities beyond major cities unreliable. But international investors are showing interest in all U.S. commercial property markets, which are drawing attention for their potential to produce higher returns than other countries' property.