Q4 Sentiment Index Remains Flat Amid
Weak Job Growth, Ongoing Refinancing Difficulties, Uncertainty Over Government Policy
(Shhh...don't tell the REITS)
WASHINGTON, Nov. 1, 2010 /PRNewswire-USNewswire/ -- Commercial real estate markets are in for a long, slow recovery amid persistently high unemployment, ongoing concern over government policy, uneven availability of capital for refinancing, and other factors dampening market activity, according to The Real Estate Roundtable's Q4 survey of over 110 senior commercial real estate executives.
The latest survey suggests continued incremental improvement in market activity, pricing and transaction volume as well as access to capital, although this is largely limited to well-leased, well-located "class A" properties — often in so-called "gateway" cities — prompting anecdotal references by survey respondents to a "bifurcated market." Aside from the most high-profile projects, said one respondent, "serious shortages exist for the majority of the industry in tapping both debt and equity."
The overall Sentiment Index dropped by one point this past quarter, to 73, but has been on a relatively flat trajectory since the beginning of the year and appears likely to stay that way for some time. Asked how real estate market conditions will be one year from now, fewer respondents in the Q4 survey said they expect conditions to be "much better," while more respondents projected only "somewhat better" conditions.
- “In the next 12 months, we’re going to be moving in the right direction, but slowly, very slowly.”
- “It’s ‘steady as she goes’ right now. The market has been healing as the broader economy has healed, but risk is still there.”
- “There’s almost a false optimism out there right now. Everyone wants things to improve, and there’s anecdotal evidence of improvement, but the empirical evidence suggests it’s getting worse.”
- “I’m not expecting a double dip or a rapid recovery. It will be a slowly sloped upward trend. The black swans are still out there, though. People aren’t discounting them the way they used to.”