Roundtable Q4 Survey: Real Estate CEOs Concerned About Protracted Washington Gridlock, Interest Rates

Commercial Real Estate Executives Report Improved Asset Values and Capital Availability Beyond Core Markets 

WASHINGTON, Nov. 8, 2013 /PRNewswire-USNewswire/ -- Commercial real estate market fundamentals show slow but steady improvement beyond core "gateway" markets such as New York, Boston and San Francisco – yet industry executives surveyed for The Real Estate Roundtable's Q4 Sentiment Index report concerns over policy gridlock in Washington, along with the negative effects of a possible interest rate increase.

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"This quarter's survey is an echo of the lack of clear policy direction that continues in Washington and indicates the toll that indecision takes on the overall economy," said Roundtable Chairman Robert S. Taubman (Chairman, President & CEO, Taubman Centers Inc.).  "As commercial real estate executives monitor fundamentals and interest rate trends, they are urging policymakers to come to a resolution quickly regarding the budget, then move onto other, productive policies that increase investment and create jobs."

"Dispelling the economic uncertainty that hangs over the economy is now the #1 priority for Congress," said Roundtable President and CEO Jeffrey DeBoer.  "In addition to a budget compromise, there are other public policies that would help foster economic certainty, spur investment in domestic markets and preserve commercial real estate's role as a job creator.  Pending policy issues awaiting action include an extension for the Terrorism Risk Insurance Act (TRIA), reforming the Foreign Investment in Real Property Tax Act (FIRPTA), passing balanced immigration reform legislation, and moving forward on comprehensive energy reform." 

The latest Roundtable Sentiment Index  shows the "Current Conditions" index at 70 points, which closes the year on a flat trajectory (the previous three quarters of 2013 registered either 70 or 71 points).  However, expectations for "Future Conditions" have dropped 4 points, registering a score of 64 (compared to 68 in Q3).  As a result, the "Overall" index for this quarter dipped 3 points to a score of 67 (versus 70 for the previous quarter).   Anecdotal comments accompanying the survey results show concerns about how an eventual uptick in historically low interest rates will impact cap rates and valuations in commercial real estate markets.   Survey respondents also report how asset values and capital availability are improving beyond core markets.

The Roundtable's Sentiment Index is the industry's most 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 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. A PDF of the entire survey report is available online at www.rer.org.

SOURCE Real Estate Roundtable