Us commercial property investors "cautiously optimistic"

Photo: Michael Tapp

The positive outlook comes from the annual forecast report released by Real Estate Research Corporation (RERC), Deloitte, and the National Association of Realtors. Their research indicates that despite ongoing uncertainty, the economy is expected to continue to improve modestly this year, as commercial real estate investment expands to the secondary and tertiary markets.

Indeed, the economy is expected grow at an annual rate of 2.6 per cent, creating 2.2 million jobs across the country, which, in turn, will drive demand for office, retail and other commercial property sectors.

Values have now risen 30 per cent from the trough, almost making up for the value lost over the past six years. Returns are forecast to be "a little lower" than in 2013, but still a "very reasonable" average of 8.75 per cent.

“We have seen steady if slow progress since the commercial real estate market collapsed in second quarter 2008, and as the future unfolds, we expect that the positive returns for commercial real estate will continue,” commented Kenneth Riggs, Jr., president and CEO of RERC.

“The stabilization that we have seen in the commercial real estate markets during the past year has added greatly to the ‘cautiously optimistic’ outlook we have for the year ahead,” added Matthew Kimmel, principal and U.S. real estate sector leader for Deloitte Transactions and Business Analytics LLP.  “Overall, we see the potential for moderate and continued growth in the volume of commercial property transactions and in property prices.”