Commercial Real Estate Executives Optimistic Despite Serious Current Market Challenges

The respondents found particularly challenging economic conditions in the hospitality and retail sectors. Market uncertainty related to the future use of office space; somewhat stable multi-family markets and relatively stronger industrial and life science markets. They cited the fundamentals of the industry, functioning capital markets, low leverage industry-wide, and modest forbearance towards debt services from lenders as factors contributing to the industry’s ability to withstand the very serious COVID-related market challenges to date.

“Almost every sector of the commercial real estate industry is facing serious economic challenges due to the general effects of the pandemic. High unemployment, closed businesses, travel cuts and more have resulted in otherwise healthy real estate portfolios and challenged all builders to meet wage, utility, taxation requirements. Overall, the low level of industry leverage, general market equilibrium, and functioning capital markets are positive factors that, combined with growing good news about vaccines, are fueling optimism among industry leaders, “said Real Estate Roundtable President and CEO Jeffrey DeBoer.

DeBoer added, “That optimism, however, depends on much-needed additional COVID relief Washington and the rapid testing and availability of effective vaccines. Federal lawmakers and regulators need to provide further support to get people and businesses into a post-COVID economy. Help is needed quickly for municipal budgets as well as for people and companies that have been negatively affected by the pandemic. Organizations need some protection from unnecessary lawsuits to allow for a more robust transition back to work. ”

The key results of the Roundtable’s Q4 Economic Sentiment Index include:

  • Increased optimism
    Respondents’ views reflected an increase in optimism about general and short-term conditions (due to a recent and sharp decline).
  • Better general market conditions
    A majority of those surveyed expected better market conditions a year from now after seeing worse market conditions today than a year ago.
  • Stable capital markets
    Most respondents cited accessible capital markets for high quality assets and an increase in debt and the availability of equity.

Data for the Q4 survey was collected by Chicago-based FPL Associates on behalf of The Roundtable.

SOURCE The Real Estate Roundtable