Economist: 2013 Another Year of Transition For Real Estate.

Commercial real estate will have to endure another year of transition in 2013, as debates over the fiscal cliff and other key U.S. policies loom, an economist said today.

In a speech before executives gathered in Buckhead Tuesday, CBRE Inc. economist Asieh Mansour said companies are waiting for more clarity over fiscal and monetary policy, and for greater momentum in the recovery of the global economy. Most are probably going to be constrained next year and look instead at their growth strategies for 2014. Amid so much uncertainty, the outlook for job growth remains tepid, Mansour said.

Her comments came during commercial real estate giant CBRE Inc.’s market forecast. While the outlook wasn’t dominated by the gloom of similar predictions in recent years, the commercial real estate recovery remains slow and more isolated to certain types of properties, such as multifamily, and to cities such as New York, San Francisco and Houston.

(Photo credit: mrshife)

Atlanta’s rebound has lagged those cities. Its recovery has also been hindered by only moderate growth in the global economy, a trend expected to continue next year. The capital markets are especially vulnerable the global economic slowdown. “In Atlanta you are not immune to what is happening in the global markets,” Mansour said.

The effects of U.S. fiscal and monetary policy drew a lot of attention. Nationally, companies remain less likely to ramp up hiring until there’s a political resolution of the more than $500 billion in tax increases and spending cuts that would take effect Jan. 1, a process referred to as the fiscal cliff. Earlier this month, the Congressional Budget Office said the fiscal cliff could trigger a recession.

There are indications Congress may take action later this month to extend the Jan. 1 deadline, Mansour said. More uncertainty surrounds how the Affordable Healthcare Act and the provisions of Dodd-Frank will impact business decisions. “Policy is dominating implications for [Commercial Real Estate],” she said.

There was some room for optimism.

While business remains cautious, U.S. consumers are regaining confidence in the economy, Mansour said.

Multifamily properties have gained momentum, and so have warehouse and distribution centers.

Central business districts with healthy tech sectors have performed well, she said.

By Douglas Sams Commercial Real Estate Editor- Atlanta Business Chronicle

Taken from: http://www.bizjournals.com/atlanta/real_talk/2012/11/economist-2013-another-year-of.html

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Hub to See Commercial Real Estate Recovery Grow In 2013, Study Says

Boston made the list of Top 10 U.S. cities where the commercial real estate recovery will soar next year with gains in leasing, rents and pricing across all property sectors, according to the Urban Land Institute’s Emerging Trends in Real Estate Forecast.

While the Hub was edged out by San Francisco, New York City, San Jose, Austin, Texas and Houston for job growth, Boston scored sixth in the nation thanks to an increase in high-technology and biomedical research & development employment, increasing investor interest, the ULI survey said.

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Despite a slower-than-normal real estate recovery, U.S. property sectors will register better prospects compared with last year, according to survey participants. Recent job creation should be enough to increase absorption and lower vacancy rates in the office, industrial, and retail sectors, helped by the limited new supply. Demand for apartments should hold up, survey respondents said. Additionally, improving fundamentals should help with rents and net operating incomes, building confidence about sustained growth and strengthening recent appreciation, researchers found.

Stephen Blank, ULI’s senior resident fellow for real estate finance, noted that investors must keep in mind recent progress made in the industry as they prepare for a slow but steady recovery. He said the findings suggest that the industry is moving forward. Those who are patient and willing to rethink their expectations and adapt to market realities are the most likely to come out ahead next year, he added.

Investment capital’s interest in commercial real estate is expected to increase as other asset classes continue to offer minimal returns or too much volatility, the report found. Transaction volume and prices are expected to rise in 2013, but increases will be muted until credit markets return to normal. Commercial mortgage–backed securities may return to the financing spotlight once transaction activity increases. Interviewees expect that CMBS issuance can return to a $75 billion to $90 billion level over the next several years.

Respondents to Emerging Trends cite several best investor bets for 2013. As some downtowns have become too pricey, look in districts where “hip” residential neighborhoods meet commercial areas. Large tenants willingly pay high rents in return for more efficient design and lower operating costs in green projects. Begin to back off apartment development in low-barrier-to-entry markets, the survey found, as these places tend to overbuild quickly, softening rent growth.

Consider housing funds as residential markets finally get off bottom and major private capital investors make a move into the sector, respondents said. Repurpose the oversupply of older properties including abandoned malls, vacant strip centers, aging office parks, or low-ceilinged warehouses — an overabundance of properties requires new blood, the survey said.

Download a copy of Emerging Trends in Real Estate 2013 here: http://www.docstoc.com/docs/133798604/2013-Emerging-Trends-in-Real-Estate?

By Thomas Grillo, Real Estate Editor- Boston Business Journal

Taken from: http://www.bizjournals.com/boston/real_estate/2012/10/commercial-real-estate-to-grow-in-hub.html

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