TORONTO, April 30, 2018 /PRNewswire/ -- Real estate professionals are divided on their perception of current market conditions, though a large share sense the market is in some stage of a downturn according to RICS U.S. Commercial Property Monitor. Both in terms of occupiers and investors, there is a clear divergence of trends by sector. The outlook is sunny for the industrial sector, flat for office space and weak for retail – both prime and secondary.
RICS monitors trends in the commercial property investment and occupier markets on a global and regional scale through quarterly surveys to industry experts. With a focus on occupier and investor sentiment, it identifies market trends earlier than other surveys.
Overall, the Occupier Sentiment Index (a composite indicator capturing momentum) is showing modest improvement in market conditions with only the retail market dragging the composite down. The Investment Sentiment Index was little changed over the quarter.
Interest in industrial assets is robust among investors. Prime industrial space is set for solid growth in rent expectations albeit secondary industrial rents are expected to have only a marginal increase. The Commercial Property Monitor projects prime and secondary industrial sectors to see the strongest gains in capital values over the coming year.
Prime office assets are generating modest increases in demand with enquiries from investors picking up slightly. However, prime office rents are seen as flat with marginally negative growth for secondary office space.
The retail sector shows the weakest outlook on both sides of the market. It has seen the sharpest rise in the availability of occupiable space in the commercial sectors and landlords are increasing inducements to potential tenants. In fact, demand from occupiers in the retail sector has declined for the fifth consecutive quarter – though this trend is slowing.
Likewise, the supply of property on the market for investment purposes was unchanged in all sectors except for retail which saw a fifth consecutive quarterly increase as investors continue to favour other sectors over retail. Consequently, capital values for retail are likely to decline over the coming year, although only to a limited extent.
For more information on the Commercial Property Monitor, visit rics.org.
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SOURCE RICS Americas