Most real estate pros today are actively monitoring the current sale market, either in disbelief, or starting to think about selling into an “up” market.  At the same time, buyers are cringing from “sticker shock”.  Their hope is that there will soon be a “bursting of the pricing bubble”.  In the language of institutional investors, is the present pricing bubble “sustainable”? A review of Table 1 on aggregate sales volume over the past 5 years indicates that there is indeed a continuing sale trend in terms of total sale volume.  For each of the past 2 years, the prior year’s sale volume exceeded the earlier year by more than 50% (+63% from 2001 to 2002; and 55% form 2002 to 2003).  Prospects are that trend will continue. Table 2 indicates that the average sale price/property is (and has been) in the $60-70M category.  Only in year 200 did this average

It has been well documented that rents for multi-family properties have “spiked” sharply as a result of limited new product (supply) and continued growth (demand) in the past 2-3 years.  In recent projects, RCDH has confronted an unusual dilemma:  unit value results via the Income Approach are or can be radically different from unit values indicated by sales data.  This is especially true in downtown Washington or in other markets (e.g., Arlington; Tysons Corner; Montgomery County) where high-rise product exists.  How is “the gap” reconciled?  Leaving aside the issue of “cost” for discussion purposes, this question will be answered in the following paragraphs. RCDH has conducted an extensive search for comparable hi-rise apartment complexes recently sold in Washington DC Metro and nationwide. In certain local cases, the application of the Income Approach indicates market values of +/-$300,000/DU.  In other more “suburban” cases, market values can equate to +-$200,000/DU. In both

As anticipated, 1st Quarter NPI Office returns came in at a pedestrian 1.96%, continuing a downward trend.  From a regional perspective, the South region posted the highest total quarterly return at 2.14%, while the Mid-West region continued to lag the pack.  CBD office assets again outperformed their suburban counterparts.  The 1st Q 2008 office sector results are off sharply from returns posted earlier in 2007, but still outpaced all other property types over the trailing 12-months. Relative Valuation…How low is too low? Income return spreads to 10-Year Treasuries have fallen steadily over the past several years for those areas with the largest inventory of office space.  In the most recent quarter, income spreads “jumped”, perhaps impacted by a valuation “lag” created by the rapid decline in Treasuries yields from quarter-to-quarter or a sign of a downward valuation correction in the offing.  Our interpretation of historical NPI relative returns in combination