Economists Predict Steady CRE Growth Ahead Despite Undercurrents of Global Turmoil10.17.2014 Sobered but Undeterred by Recent Wall Street Woes, ULI Forecasts Three More Years of CRE Growth October 15, 2014
The latest Urban Land Institute/EY Real Estate Consensus Forecast is slightly more optimistic than the previous survey in April regarding commercial property transaction volume and pricing, multifamily fundamentals and returns on institutional CRE properties. The 43 experts representing 32 of the U.S.'s leading real estate investment, advisory, and research firms surveyed for the forecast last month included CoStar Portfolio Strategy economists Hans Nordby, Walter Page and Shaw Lupton. "We're at a point in the cycle where things feel very good," said Josh Scoville, senior vice president for research with Hines, during a panel discussion on the forecast's release. "There's plenty of price and rent growth, but we've got to be aware of the risks, because it will change." The panel, which included David J. Lynn, CEO and co-founder of Everest High Income Property and Martha Peyton, managing director and head of global real estate strategy for TIAA-CREF, raised concern over more recent economic news, including this week's equities market selloff, the drop in oil prices and anxiety over global economic growth. "We've just got to be aware and not get too complacent, because things that are good tend to change for the worse," Hines' Scoville noted. Overall, the forecasts for commercial real estate sectors remain positive, despite slightly lower sentiment from last spring on a few key indicators such as CMBS issuance, housing starts and housing price growth. And the U.S. remains a strong haven for cross-border investment, analysts agreed. "Global investors generally have an optimistic view of real estate market opportunities worldwide," said Howard Roth, global real estate leader at EY, noting that a broad consensus of the experts predict a continued rise in global transaction volume. The future for CRE and the economy looks bright despite the current market turmoil in the U.S. and volatile conditions around the world of late, especially in Europe. "While some see an economic slowdown as a concern, currently, conditions remain positive for real estate investing over the next several years," Roth said. Key findings from the Urban Land Institute/EY Real Estate Consensus Forecast include the following:
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