Investor Confidence Is Growing

With investor sentiment in commercial real estate on the rebound, the National Real Estate Investor Sentiment Index rose to another high in the first quarter of 2013 — up 3 points to 174.  This is an especially strong vote of confidence because the survey was conducted in late December and early January when we were all focused on the potential impact of the fiscal cliff on the U.S. economy.

Investors continue to be optimistic about commercial real estate, but may remain wary of the economy in general. This was echoed in PwC’s 1Q13 Real Estate Investor Survey results, which are based on hundreds of responses from industry participants, as reported by the CCIM Institute.

Whereas multifamily fundamentals have led the way in the real estate recovery with retail close behind, we’re now seeing the office and industrial markets firming up in a significant way.

According to the PwC report, strong warehouse demand is fueling investor interest in the industrial sector because business and consumer spending drives tenants to these properties.  Flex/R&D properties are also benefiting from high demand and low supply, with strong high-tech job growth and healthy suburban office markets proving to be ideal for flex/R&D investment.

Survey respondents are also growing increasingly confident that central business district (CBD) office tenants will remain in their spaces upon renewal, although cheaper rents, discounted prices and less competition are driving more investors to consider suburban office opportunities.

With low capitalization rates and increased rent growth, class A regional and super-regional malls are very attractive in the retail sector once again due to limited supply and pent-up consumer demand.  However, many big-box retailers are expected to consolidate assets.

Finally, the demand for multifamily properties will continue to grow as younger generations choose to rent rather than own a home.  Multifamily rent rates and cap rates remained unchanged in 1Q13 after a strong showing in 2012, and most survey respondents expect this trend to continue for the next six months, according to PwC.

With our four offices in New York, Connecticut and Massachusetts, our investment sales teams are well positioned to support multifamily and commercial real estate investors from New York to Boston.  If you’re a property owner or an investor in the mid-market segment and want to discuss your investment goals and how we can help you achieve them, please give us a call.