For years, investors have been concerned about the fluctuating markets and commercial real estate industry. However, the market may finally be recovering, as new data shows executives have a brighter outlook for the future and recent indices point to a slow but certain recovery for the industry.
The Real Estate Roundtable's Q1 2013 Sentiment Survey revealed more real estate executives have a positive outlook on the market and expect it to improve even more a year from now. Compared to the Q4 2012 survey, 8 percent more respondents claimed current conditions were "somewhat better" than one year ago, while 16 percent more expect conditions to be "somewhat better" to "much better" in another year. All three indices in the survey came in higher for Q1; the Overall Index rose to 69, the Current Conditions index hit 70 and the Future Conditions index jumped to 67.
"As today's survey shows, commercial real estate is on the mend, but it remains a fragile recovery very specific to property type and individual markets," said Robert Taubman, Roundtable chairman. "It is also clearly dependent on what happened with the broader economy, policy decisions being made - or not made - in Washington, and how policymakers ultimately unwind what has been a very long stretch of accommodative monetary policy."
Other data also positive
Those aren't the only numbers showing improvement. Consumers who are still worried about the future of the commercial real estate market should take into consideration the Moody's/RCA Commercial Property Price Indices and the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index. While the Moody's/RCA indices showed commercial real estate prices increased 8.1 percent in 2012, the NCREIF index indicated stable returns, according to National Real Estate Investor (NREI).
"Real estate investment returns have a reputation for stability, and 2012 has reinforced that," said Ron Kaiser, NCREIF board chairman, according to NREI. "Not only have quarterly returns again come in at the 2.5 percent level, but all property types and nearly all geographic regions report similar numbers."
With the outlook appearing positive, more companies may be seeking business financing or investment loans to launch their firms or further expand operations. Unsure of where to turn for information about the market and help with securing funding? You may want to turn to a small or mid-sized local bank, which can not only provide lending, but also offer more personalized services to suit your expansion needs.
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