(Mark Your Calendars. The 11th Annual RealShare Washington, DC convenes at the Ritz Carlton, June 1.)
WASHINGTON, DC-The commercial real estate industry is normally an optimistic one, which is why opinions captured in the latest Real Estate Roundtable’s quarterly Sentiment Survey are a head-scratcher. For the most part, the survey revealed a snapshot of an industry feeling relatively content, especially compared to last year. However, that good feeling shows little sign of lasting. When asked what could go wrong, the respondents ticked off a number of items.
“It’s a new sort of bifurcation for the industry,” Roundtable CEO Jeff DeBoer tells GlobeSt.com. “For the past few years we’ve been hearing about the haves versus the have nots and the well-capitalized companies versus the companies that can’t get a loan.”
Some of that certainly still exists, he says, but a new line of demarcation is also emerging--between current circumstances and future projections--that is rarely seen in the industry. “Normally when you ask a real estate executive if he’s feeling positive now, and he responds yes, you can assume that he’ll be feeling just as positive, if not more, next year,” DeBoer says. “This is a bifurcation across entity and geographic classes. Everyone knows where they stand today and they feel good about it, but they can’t help but feel it won’t continue.”
The issues are no surprise: global economic risks, Washington’s inability to deal with budget and tax issues, ongoing turmoil in Europe and commercial mortgages maturing this year and beyond that may well not be refinanced.
The survey’s Overall Index now stands at 70, up two percentage points from Q1. It has not reached its post-crash high of 77 from the first half of 2011, but it has recovered from its low of 59 in Q4 of 2011.
The industry’s “bifurcated” views of current versus future conditions was best illustrated in the jump in the “Current Index” score between Q1 and Q2, from 66 to 71. The “Future Index” by contrast slid from 70 to 69 quarter over quarter.
The majority of respondents expect some improvement in overall market conditions, asset values and capital availability over the next year. More than one-third, however, believe asset values and capital-market conditions will remain the same or get worse between now and the second quarter of 2013.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
