Commercial Real Estate Executives Are Optimistic About the State of the Market in 2016

real-estate-325285_960_720Commercial real estate executives are apparently optimistic about the state of the market in 2016, and many are predicting greater deal volumes for their firms. The influx of commercial real estate (CRE) tech companies are revolutionizing the industry due to the adoption of new technology. The U.S. CRE market is recovering, but executive recognizes that there are still certain segments are positioned for a significant decline.

Forbes Insights report, “CIT Commercial Real Estate Outlook: Key Findings,” was sponsored by CIT and offered insights about current trends, challenges, and the outlook for the U.S. Commercial Real Estate industry. The Forbes Insight report was conducted online between Feb. 12 and March 14, 2016, and 201 senior executives from CRE management companies, brokers, investors, financing executives, and attorneys were surveyed.

Approximately 53 percent of respondents indicated their segment of the market is either strong or very strong. Forty-four percent of executive surveyed said they agreed or strongly agreed that certain segments are poised for significant decline. Also, forty-seven percent of total respondents agreed or strongly agreed that the U.S. CRE markets are in recovery.

More than 60 percent of executives surveyed described their current market posture as optimistic. They described today’s market conditions as having a smorgasbord of opportunities and challenges. Upon reflecting upon the economy, executives have seen consumer confidence, interest rates, unemployment, U.S. tax rates, and the global economy, which are the five factors driving CRE investment. They also expressed moderate support for the government’s role in stabilizing the nation’s economy.  Approximately 48 percent believe a Republican win in the U.S. presidential elections would positively impact sectors where they’re currently actively.

The benefits of commercial real estate technology are fairly clear, and most executives agree that advancements are revolutionizing the industry. However, adoption is slow for many, and only 11 percent of respondents rated themselves as “leading edge,” with regards to implementation. Most respondents believe the stakes are higher and they struggle with the success of tech-enabled entrants into the industry and commercial real estate investments.

Approximately 71 percent of companies said adequate capital is available for investment and 24 percent say capital is available for “the right” deals. Slightly more than half of respondents said they were lengthening the duration of their financing in an effort to secure today’s relatively low rates over a longer period.  Emerging rules mandated that low-income housing is integrated with the affluent housing, delivering mixed results.