Commercial Real Estate Industry Leaders Remain Confident and See Balanced Market Fundamentals for Q3 Despite Political Uncertainty

"In the face of geopolitical uncertainty, we continue to believe that the real estate industry will navigate headwinds and maintain a positive path forward," said Roundtable President and CEO Jeffrey DeBoer. "As our Q3 Index shows our industry leaders continue to conduct business, asset values are stable, equity capital is widely available, and debt funds have stepped in to fill the void for the lack of construction financing we have been experiencing over the past year," DeBoer added.

The Roundtable's Q3 2017 Sentiment Index registered at 50 — two points down from the last quarter. [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.] This quarter's Current Conditions Index of 51 decreased two points from the previous quarter. This quarter's Future Conditions Index of 48, decreased by two points from the previous quarter, however, was the same in Q3 2016.

The report's Topline Findings include:

• Although most responders for the Q3 report remain confident and view market fundamentals as strong, their optimism has waned for two straight quarters in light of the lack of regulatory changes in Washington, D.C.
• While most responders feel market fundamentals are strong, they are experiencing hesitation around decision making on the part of their tenants/clients. This hesitation is due to uncertainty about market conditions and trepidation about the new administration in Washington, D.C.
• Most responders feel high quality assets in primary markets are at peak pricing. A Few responders suggested asset prices may be beyond peak. Despite asset pricing being perceived as high, there are many bidders for the highest quality assets.
• Despite the perceived slowing of Chinese capital flowing into the US real estate market, most responders feel equity capital is widely available. In answer to the lack of construction financing, the debt funds have stepped in to fill the void.

Forty-three percent of survey participants report Q3 asset prices today are "somewhat higher" compared to this time last year, suggesting primary markets are at peak pricing due to aggressiveness in the debt market and vast amounts of available capital. However, with 55% of respondents said they expect values to be "about the same" one year from now, pricing may remain steady throughout the course of the next year.

DeBoer added "Despite the continued slow but steady course the real estate industry has been on, Washington policy makers must focus on bipartisan growth-oriented policies for the future. The Roundtable will continue to work with policy makers by sharing thoughtful, long-term views about policy initiatives that will continue to provide our industry and the U.S. economy with much-needed policy reform in Washington."

Data for the Q3 survey was gathered in August by Chicago-based FPL Associates on The Roundtable's behalf.  For the full survey report, visit www.rer.org

SOURCE Real Estate Roundtable

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