New Data Shows Positive Outlook Through 2014
Several positive indicators point
to a favorable outlook for commercial real estate through 2014, according to
the PwC Real Estate Barometer in the 1Q11 PwC
Real Estate Investor Survey. By analyzing historical and forecast stock
data, the barometer measures inventory changes within the office, industrial,
retail, and multifamily sectors over timein relation to the four stages
of the real estate cycle.
“As investors become more confident
about the long-awaited recovery of the industry, they are eager to get deals
done. This bodes well for the industry as the volume of capital chasing deals
is expected to increase in all sectors as investors work to deploy capital
before interest rates rise, overall cap rates increase, and the industry shifts
more in favor of sellers,” says Mitch Roschelle, partner and U.S. real estate
advisory practice leader for PricewaterhouseCoopers.
With constrained supply and
decreasing vacancy, the majority of the office sector will be in recovery by
year-end, with 86.2 percent of the sector rising from the market’s bottom by
year-end 2012, according to the report. Despite the nationwide rebound,
hard-hit markets such as Chicago, Las Vegas, Los Angeles, and Tampa, Fla., will
remain depressed through 2012.
Inconsistent consumer spending and
inflation concerns will keep about 76.6 percent of the retail market in
recession through 2012, with a more widespread recovery expected by year-end
2013. A few isolated markets such as Long Island, N.Y., and Nashville, Tenn., may
see recovery by 2012, faring better than the national trend.
Availability rates for the
industrial sector are expected to peak in 2011 as tenant demand strengthens due
to the improving economy. As a result, the industrial market is expected to
rebound in 2011 and 2012. As imports and exports increase, a good share of the
industrial market will enter the expansion phase in 2013 and 2014, with the
exception of a few lagging markets such as Tampa, Akron, Ohio, Cleveland, and
The multifamily sector is recovering well ahead of the other sectors. As
tighter lending restrictions limit home-buying opportunities, housing demand will
push approximately 30.2 percent of the market into expansion through 2014. New
Orleans and Syracuse, N.Y., are not expected to experience near-term gains.