NEW YORK CITY—RICS' latest commercial property survey illustrates the uncertainty attending the outcome of the 2016 elections, and the wait for the Federal Reserve to drop the other shoe when it comes to interest rates. “The market is transforming for the worse due to many domestic and global factors, including the presidential election, and may take some time to stabilize and take a more reliable direction,” says Tony D. Kamath, principal and managing director, International Valuation & Advisory LLC in New York City, a respondent to the RICS survey.
He adds, though, “In every presidential election year, the market tends to be cautious because people wait to see what the results are, and this year isn't any exception. Hopefully, the market will improve after the election, whoever wins, when we see the outcome and future direction emerging from that.”
Although the Fed decided to hold off on a rate increase this month, a more definitive action is probably in the offing once the dust settles from the election results, says survey respondent Anthony C. Iaccio, a principal at Blake & Iaccio LLC, also in New York. “The probability of a post-election Fed move on interest rates seems high, both because of the deferral of a move from the last two Fed meetings as well as the need to normalize the rate structure,” he says. “It is likely that the early-on negative effects of a rate rise will ripple through the economy, particularly the real estate and foreign exchange markets.
“Increases in the dollar versus the euro and the yen will dampen investment in New York City and may trigger a cascading effect and depress capital value change since the recent past favorable exchange rate structure will likely no longer be in place,” Iaccio continues. “And with the slowing or potential reversal of capital value growth, we would expect to see cap rate expansion since cap rates are already at historic low points.”
The survey also found that while the US retail sector lagged in both the investor and occupier markets, tenant demand continued rising overall at a steady level and rose with particular strength in the office and industrial sectors. In fact, the RICS survey shows that retail is the only sector in which rents are expected to trend downward in coming months, with demand turning sluggish and the supply of available space continuing to rise.
On the whole, though, 22% more respondents to the RICS survey reported an increase than a decrease in occupier demand while interest from international investors continued growing firmly, helping investor demand rise across all sectors. The survey was conducted among RICS-qualified professionals and reflects industry conditions as of the third quarter.
He adds, though, “In every presidential election year, the market tends to be cautious because people wait to see what the results are, and this year isn't any exception. Hopefully, the market will improve after the election, whoever wins, when we see the outcome and future direction emerging from that.”
Although the Fed decided to hold off on a rate increase this month, a more definitive action is probably in the offing once the dust settles from the election results, says survey respondent Anthony C. Iaccio, a principal at Blake & Iaccio LLC, also in
“Increases in the dollar versus the euro and the yen will dampen investment in
The survey also found that while the US retail sector lagged in both the investor and occupier markets, tenant demand continued rising overall at a steady level and rose with particular strength in the office and industrial sectors. In fact, the RICS survey shows that retail is the only sector in which rents are expected to trend downward in coming months, with demand turning sluggish and the supply of available space continuing to rise.
On the whole, though, 22% more respondents to the RICS survey reported an increase than a decrease in occupier demand while interest from international investors continued growing firmly, helping investor demand rise across all sectors. The survey was conducted among RICS-qualified professionals and reflects industry conditions as of the third quarter.
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