Commercial real estate investors predict 'solid prospects' ahead

According to new research, the majority of US commercial real estate executives predict 'solid prospects' for their sector over the coming year.

The 2016 Commercial Real Estate Outlook survey, which was carried out by commercial lending and leasing services provider CIT Group and overseen by Forbes Insights, found that the majority – 52 per cent – of commercial real estate investors – expected that their area of their market is currently 'strong' or 'very strong.' Seventy-one per cent of the investors surveyed reported that 'adequate capital' was currently available for investment into the arena.

More than 200 senior commercial real estate executives were questioned for the report, which aimed to offer a detailed picture of the predictions for the commercial real estate sector for 2016 and beyond.

Matt Galligan, president, CIT Real Estate Finance, said: "Commercial real estate executives appear relatively optimistic about the general state of the market in 2016, with many predicting higher than average deal volumes for their firms.

"Further, when considering the adoption of new technology, most believe that the influx of commercial real estate tech companies is revolutionising the industry," Mr Galligan went on to say.

Some of the key findings from the research included the fact that, while commercial real estate executives were found to have an overall positive view of the marketplace, they admitted that there were challenges remaining for the sector to overcome. With almost half – 47 per cent – of the executives questioned reported that the US commercial real estate market was recovering, some sectors of the market still seem primed for 'significant decline,' said 44 per cent of those surveyed.

More than 60 per cent of those surveyed for the real estate report said that their current market posture was opportunistic, adding that the current mixed market conditions meant that there were many opportunities that were ripe for the picking. The mixed market was both a blessing and a curse, they said, adding that there were several economic factors driving commercial real estate investment. The most important of these factors included consumer confidence, US tax rates, interest rates, unemployment and the overall global economic situation.

The report also looked at the many benefits of commercial real estate technology, with the vast majority of those questioned agreeing that the technological strides being made by the commercial real estate sector were revolutionising the industry. However, despite the strides forward in terms of development, many were found to be slow to take up the opportunities, with just 11 per cent of executives saying that they were 'leading edge' in terms of technological implementation.

The majority – 71 per cent – of those surveyed for the report – said that adequate capital was currently available for commercial real estate investment, however 24 per cent said that this capital was only available for the 'right deals.' More than 50 per cent of those questioned reported that they would look to their financing with a longer term goal in mind in an effort to ensure the current low rates benefited them and their investments for as long as possible.

Other elements of the marketplace that were said to be boosting investment into the arena were incentives being offered by state and local Governments, such as cash grants, tax credits and other business incentives. Thirty-four per cent of those surveyed reported that these incentives – which also included green tax credits – were having a major impact on their choices in terms of property design and renovation and linked commercial real estate investment.

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