Commercial real estate markets are expected to continue to firm in the next three years, albeit possibly not as robustly as during the past three, according to a recent survey of industry economists.
Easterly Government Properties, Inc. (NYSE: DEA) is confident that the federal government’s preference for leasing properties will support its business strategy for decades to come.
The government’s shift toward leasing has been evident since the 1960’s and is unlikely to change any time soon, according to Easterly President and CEO William Trimble. In an interview with REIT.com, Trimble noted that during the Nixon administration, the federal government owned about 70 percent of its properties and leased 30 percent.
The commercial real estate industry should see at least three more years of sustainable growth, based on a combination of sound economic and property market fundamentals, according to a survey of industry economists.
In the latest edition of Fundamentally Speaking, Calvin Schnure, NAREIT’s vice president for research and industry information, observed that commercial real estate fundamentals remain sound despite stock market volatility during October.
Schnure explained that movements in the stock market in October mostly reflected concerns about global growth and the impact of the global economy on the United States. Worries about the strength of the U.S. dollar and its impact on U.S. firms that repatriate their foreign earnings also played a factor, according to Schnure.
The commercial real estate industry is poised for broad-based growth in the coming year as performance and profitability continue to improve across most property types and markets, according to projections from consulting firm Deloitte.
The company’s 2015 outlook is supported by improving property fundamentals, a strengthening economy, easy financing, and increased domestic and international investment activity, according to Deloitte. Against that backdrop, U.S. REITs are expected to continue to outperform benchmark indices such as the S&P 500 and Russell 2000.
Commercial real estate executives are overwhelmingly bullish on the outlook for their industry through the next 12 months, according to a survey conducted by international law firm DLA Piper.
DLA Piper’s survey, which was conducted in August, showed 89 percent of executives are upbeat for the coming year, compared with 85 percent a year ago and 30 percent in 2011. The survey was completed by 158 respondents, including CEOs, COOs, CFOs and other senior executives and real estate professionals.
Faced with high prices for top-quality properties in primary markets, commercial real estate executives are looking to mid-tier assets and secondary markets to generate higher yields, according to a survey conducted by KPMG LLP.