Well-leased and well-located commercial properties are seeing better access to capital and incremental improvements in market activity, but the commercial real estate (CRE) markets are, by and large, in the doldrums, according to The Real Estate Roundtable's Q4 survey of CRE executives.
Survey respondents observe a bifurcated market, the Roundtable says. Outside of the most high-profile projects, ‘serious shortages exist for the majority of the industry in tapping both debt and equity,’ one respondent said.
The overall Sentiment Index dropped by one point this past quarter, to 73. When asked how real estate market conditions will be one year from now, fewer respondents in the fourth-quarter survey said they expect conditions to be ‘much better,’ while more respondents projected only ‘somewhat better’ conditions.
‘Positive opportunities certainly exist; however, our industry overall will continue to be weak until the job market improves,’ says Roundtable Chairman Daniel M. Neidich. ‘More than anything, we need a return to hiring, which would boost consumer spending, lift occupancy levels and operating income, and begin to repair the dramatic erosion of commercial property values, which are fundamental to owners' ability to obtain debt and equity capital.’
The percentage of fourth-quarter survey respondents who said debt availability is better today than a year ago remained unchanged from the previous quarter. However, fewer respondents in the latest survey said debt conditions are ‘much better,’ while more respondents said they are only ‘somewhat better.’
On the equity side, the percentage of respondents who said equity availability is better today than one year ago declined slightly between the third and fourth quarters, from 78% to 75%.
SOURCE: Real Estate Roundtable