Real Estate Investors Adjusting to 'New Normal'
Chicago, IL, Feb. 8, 2013 -- Frustrated by continued uncertainty, a sluggish recovery, and a challenging investment environment, investors generally appear eager to put the past behind them and adjust to the new normal, according to a study published jointly by Real Estate Research Corporation, Deloitte, and the National Association of Realtors.
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According to the report, investors appear to realize that this environment will likely be with us for the foreseeable future, and that adjustments may need to be made to maximize commercial real estate investment performance and yield in our continuing slow-growth economy.
Among the reports findings are that the economy is expected to improve only modestly in 2013, with the budget deficit, tax increases, and cuts in government spending expected to continue the economic uncertainty.
In general, capital remains available for commercial property investments, but the discipline for capital has been inching upward and is becoming more selective. The report also carefully analyzes and offers an assessment of the office, industrial, apartment, retail, and hotel property sectors, as well as for commercial real estate as an asset class, for 2013.
“It is time to stop waiting for the economy and the investment environment to get better. This is it—this is the new normal—and we need to turn the page on the past and make the adjustments needed to be successful for the balance of this decade,” said Kenneth Riggs, Jr., chairman and president of RERC.
“Investors are facing the challenges ahead, and commercial real estate continues to be an attractive investment for a variety of reasons in this economic climate.”
The group expects the commercial real estate recovery to continue throughout 2013. “A pent-up demand for commercial property space has been developing with the nearly 5 million net new job creations in the past three years,” said Lawrence Yun, NAR chief economist.
“That demand steadily reaching the market, combined with little new construction, will likely help lower vacancy rates and push up rents.”