But they are concerned about the future
Things are looking ok currently in the commercial real estate sector but some of the industry’s top executives are not so sure about what’s ahead.
The Real Estate Roundtable found that CRE executives believe that we may be coming to the end of its current cycle and at peak-pricing.
"As we move into the second half of the year, we continue to see robust markets, with debt and equity available, and asset values strong. The commercial real estate industry remains confident for the remainder of 2018," said Roundtable CEO and President Jeffrey D. DeBoer. "The positive snapshot of current commercial real estate markets reflects a general absorption of recent interest rate increases, coupled with overall economic stimulation from tax reform."
The Roundtable’s Q3 Sentiment Index was up 1 point from Q2 at 52 (scale is 1-100 with 50+ being positive) but while the index of current conditions was up 4 points quarter-over-quarter to 56, the index of future conditions was down 7 points to 49.
Peak pricing, debt availability concerns
Most responders suggested asset values have reached peak pricing for many property types, and certainly in major gateway cities. Despite potential peak pricing, industrial properties continue to attract a large volume of investors.
Debt and equity capital sources remain plentiful, but responders expressed concerns about the amount of debt available and the ramifications of the mounting time pressure some lenders have to invest their capital.
"Looking to future market conditions, industry executives are noting uncertainties regarding the November midterm elections and growing interest rate and international trade concerns. Policymakers must stay focused on developing pro-growth policies that continue to benefit the overall economy and spur job growth," added DeBoer.
