Grubb & Ellis Co., a Santa Ana, Calif.-based real estate services and investment firm, is predicting that this year will see a slow but continued growth for all commercial real estate (CRE) property sectors.
‘Although a variety of economic and political factors, including continued high unemployment, an upcoming U.S. presidential election and the unresolved European sovereign debt crisis, weigh on the minds of real estate owners, users and investors, we anticipate gradual improvement in leasing markets and a boost in investment sales volume,’ said Robert Bach, the company's senior vice president and chief economist, in announcing the release of the company's 2012 National Real Estate Forecast. ‘This is based on an assumption of GDP growth in the range of two percent to 2.5 percent in 2012 – still below the economy's long-term potential of around three percent, and an average of 125,000 net new payroll jobs per month.’
Grubb & Ellis expects the multifamily sector to be the strongest within CRE, with California's San Jose-Silicon Valley leading the nation in development. The office space sector is predicted to be the weakest performer, which the company attributes to continued "subpar" national economic growth. However, Bach warns that U.S. CRE's greatest problems may be based across the Atlantic.
‘The wild card this year is the unresolved European debt crisis, which has the potential to send lenders and investors to the sidelines,’ Bach said. ‘If they stay in the game, expect overall commercial real estate sales to rise 25 percent in 2012, generating marginally lower cap rates for nondistressed assets.’
The Grubb & Ellis 2012 National Real Estate Forecast. is available online.