The outlook for the commercial real-estate market remains uncertain due to “unstable market fundamentals and uncertainty over government policy,” according to the Real Estate Roundtable’s third-quarter 2010 Sentiment Index.
But the index, based on a survey of senior real-estate executives, suggests that the commercial real-estate markets have halted their skid.
“Uncertainty reigns. Whether it is job creation, unstable capital markets or a volatile mix of current policy and the upcoming mid-term elections, investors and businesses are skittish, causing the commercial real estate outlook to be flat,” said Real Estate Roundtable President and CEO Jeffrey DeBoer.
“The good news is that last quarter’s view that commercial real-estate markets have stopped falling has been confirmed this quarter and values for high-quality assets show strength. But the overall sentiment is that the industry is in for a long, slow recovery characterized by extreme caution.”
More than 110 executives from the commercial real-estate sector—encompassing office buildings, shopping malls, warehouses, hotels, and apartment buildings—participated in the latest Q3 Sentiment Survey. For the first time, the survey’s current and future conditions indices merged, scoring an Overall Sentiment Index of 74 (down from 76 in the previous quarter). The score suggests a relatively positive trend and a flat trajectory, the organization said.
The full news announcement on the Q3 index is available here.
Although 62% of the survey participants reported real-estate market conditions today as “somewhat better” than a year ago (down from 65% in Q2), only 19% said conditions are “much better” (up from 17% last quarter).
Looking forward, 59% of respondents predicted conditions one year from now will be “somewhat better” (down from 60% in Q2), whereas only 20% expect conditions one year from now to be “much better” (down from 28% last quarter). The overall Current Conditions index of 74 for Q3 2010 stands in stark contrast to a score of 36 for the same time period last year.
The Real Estate Roundtable Sentiment Survey is described as a comprehensive measure of leading real-estate executives’ confidence in financial and real-estate markets. The survey, conducted by FPL Advisory Group, captures the perspectives of over 100 senior real estate executives, including CEOs, presidents, board members, and other executives from a broad set of industry sectors including owners and asset managers, financial services firms and operators.
More information on the Real Estate Roundtable: www.rer.org.