The attached article is a good summary of what’s happening across the country today in commercial real estate investments in the public sector. As predicted in our annual Certified Commercial Investment Member Forum in January, these funds that have raised billions of dollars are having a hard time spending them and attracting the returns that they promised. A number of these funds were placed 2-3 years ago and will expire this year if not spent on buying commercial and investment real estate.
In Hawaii, we have had less distress than most U.S. mainland cities because there has not been overbuilding. We have not seen many of these funds looking to invest in Hawaii, as they are focused on larger markets and markets with greater distress and foreclosures. The distressed commercial real estate market across the country, although pronounced, has not hit massive numbers of properties. Greater supply was thought to continue to drive prices lower.
This article deals with the fact that some investment managers are being pushed to invest in properties at the moment that could end making marginal investments. The other alternative is to return the money to investors and not obtain the management fees as originally planned.