The next wave of commercial property deals is surging to a 10-year high, according to the Urban Land Institute (ULI) and Ernst & Young (EY). The team recently forecasted commercial property transactions to reach $430 billion by 2016. Their outlook projects a steady advancement of the U.S. economy coupled with continuing vigor of real estate capital markets. Added to this positive mix is an expectation of unflagging growth in both the commercial real estate and housing sectors.
ULI and EY surveyed 39 leading industry economists to get their prediction on what course real estate will take in the short and long-term. ULI analyzed the resulting data earlier this year. This Consensus Forecast reflects consensus reached on 27 economic and real estate indicators.
One key indicator–the market for securities backed by commercial mortgages–has rebounded from the recession and market participants are optimistic about the quality of the securities being offered.
Also expected to rise are retail rental rates, which have not risen since 2007.
“Respondents to the Consensus Forecast survey project consistent growth in the real estate industry, bringing some key factors back to pre-recession levels and others moderating to long-term averages,” Anita Kramer, vice president at ULI Center for Capital Markets and Real Estate, said in the statement.
Global real estate leader for EY, Howard Roth, commented, “Although we’ve made significant improvement over the past year, the recovery has been uneven globally and many risks still exist, including high global unemployment, high government debt, deflationary pressure in advanced economies, weak domestic demand, capital flow volatility in emerging markets and the potential impact from Fed tapering in the US. Still, all signs point to a continued gradual improvement in both the economy and real estate market fundamentals.”
The Consensus Forecast keeps adding to their good real estate industry news with several positive prognostications about the overall economy and employment.
Meissner Jacquét Commercial Real Estate Services agrees with the forecast that the commercial real estate market is on the wave of continual improvement. Jerry Jacquet, Principal of Meissner Jacquét, adds that “commercial construction has started to pick back up, especially with multi-family development, property repositioning, and tenant improvements, all resulting in increasing jobs and production.”
Sources: URBAN LAND INSTITUTE: Commercial Property Transaction Volume On Course To Reach A Ten-Year High By 2016, Says New ULI-EY Real Estate Outlook