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| Mitch Roschelle |
ATLANTA, GA (Oct. 29, 2012) – Members of the commercial real
estate community are optimistic about the industry’s prospects in 2013,
forecasting increased profitability as well as more absorption and decreased
vacancy rates across all property types.
That’s the overall theme of the recently released “Emerging
Trends in Real Estate 2013.” The latest episode of Michael Bull’s “America’s
Commercial Real Estate Show” provided an enlightening look at the highly
anticipated annual report, which is produced by PricewaterhouseCoopers (PwC)
and the Urban Land Institute. The report is based on surveys and interviews of
900 real estate executives, investors, developers and market experts.
“We’ve really taken a turn, and those who play in the
commercial real estate space feel very good about 2013,” said Mitch
Roschelle, a partner at PwC and the leader of the firm’s U.S. Real Estate
Advisory Group.
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| Chuck DiRocco |
For instance, 74 percent of those surveyed this year said
profitability “would be good to excellent” in 2013, according to Roschelle.
Last year, 63 percent said the same about 2012.
Nevertheless, 2013’s recovery will largely be a modest one,
as the industry and the United States as a whole face several macro-level
challenges. Noting that the report’s subtitle is “Recovery Rooted in
Uncertainty,” Chuck DiRocco, a real estate researcher for PwC, said the
challenges include the ongoing Euro crisis, the upcoming “fiscal cliff” facing
the federal government and relatively small GDP growth.
Roschelle said a “chase for yield” is bringing more
investors into the commercial real estate space, as those frustrated by
theperformances of stocks and bonds seek the higher and more stable rates of
return produced in the sector.
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| Office Property |
As for specific property types, industrial “was without a
doubt the breakout asset class projected for 2013,” Roschelle said. “Two-thirds
of our survey participants felt that the asset class was a buy. Only 8.5
[percent] suggested it was a sell.”
Investor interest in the office market also is beginning to
climb. “The office sector is really becoming top of mind, and the reason there
is we haven’t overbuilt office,” Roschelle said.
However, while it should experience modest improvements, the
retail market “is still going to struggle a bit in 2013,” DiRocco said. “We
know retail spending has increased a bit, but we still think there’s just a
little bit too much space out there.”
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| Industrial Property |
The report also forecasts increased availability of both
debt and equity financing and increased investor interest in larger secondary
cities.
Among the “best bets” for 2013 listed by the report:
investors will concentrate acquisitions in budding infill locations; developers
will scale back construction of apartment properties in low-barrier-to-entry
markets; and property owners will look to repurpose obsolete facilities.
The entire “Emerging Trends in Real Estate 2013” episode is
available for download at www.CREshow.com.
The next “America’s Commercial Real Estate Show” will be
available on Nov. 1 and will examine the issues facing the commercial real
estate industry in 2013.
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