Most Commercial Real Estate Execs Still Upbeat

Washington, DC, January 30, 2008--Despite worries over the contraction of financial markets, most U.S. real estate executives believe industry fundamentals are solid and that overseas growth will offset the softening of the domestic market, according to a new economic report released at The Real Estate Roundtable’s 2008 State of the Industry Meeting in Washington, DC.

According to the report, 69 percent of executives forecast increases in revenues in 2008 and 71 percent expect profitability to increase.

While the numbers are down from a survey conducted one year ago, when 85 percent of respondents predicted increased revenue and 80 percent predicted profit growth, the optimistic consensus is clear, said the report’s author, William J. Ferguson, FPL’s co-chairman.

“While we’re seeing a more cautious approach to enterprise management in 2008, new opportunities are opening up due to industry globalization, which presents new areas of investment for U.S. capital while also attracting foreign equity capital to our shores,” Ferguson said.

Many respondents were buoyed by the continued flow of equity capital, as well as the prospects of assuming market share left by weaker competitors, and new technological advances that are improving cost management and customer communication. They also expressed enthusiasm for the growing trend toward environmentally sustainable development.”

“As the survey illustrates, the current crisis in capital markets is an obvious concern to real estate industry CEOs, yet market fundamentals in commercial sectors remain stable,” said Roundtable President and CEO Jeffrey DeBoer.

“The worst damage from today's market turmoil has been to investor confidence, and that is what must be addressed by national policymakers in both the short- and long-term. The economic foundation of today's institutional-grade commercial property market is sound, and the industry is prepared to work with lawmakers at all levels of government on policies that will best stimulate economic growth.”

Within the real estate industry, more than half of respondents are confident about prospects for their own sectors, while just 15 percent are not. Among those most confident are equity REITs, investment managers and private equity firms. Those that are least confident include homebuilders, investment banks and developers.