Survey: Falling Rates Spark Rising Optimism
A new PwC survey of real estate investors in the second quarter of 2014 brings good news all around for the CRE market. The consulting firm’s forecast says that investors expect positive trends to continue in the commercial real estate industry for the rest of 2014—despite anticipating rising interest rates, which experts expect won’t hinder industry recovery.
Steady improvement in employment growth during the past 12 months was credited with a rise in demand for office space. Continued sluggish demand in the retail sector isn’t expected to slow down the pace of improvement forecast to accelerate over the next two years, the survey noted. Experts are optimistic that the industry will see some expansion as new supply currently is limited.
The PwC survey highlighted the fact that overall capitalization rates fell in 27 of the 34 markets surveyed, indicating that the real estate recovery is durable and that both foreign and domestic investors are using cash-flowing asset classes like real estate as a long-term investment. Most participants in the PwC survey expect cap rates to hold steady during the next six months.
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