Monday
October 20, 2014

Big Year Predicted for Commercial Success

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Big Year Predicted for Commercial Success

Commercial real estate investments are expected to produce solid returns this year, according to an annual forecast report released by the Real Estate Research Corporation, Deloitte, and the National Association of REALTORS®.

“We have seen steady, if slow, progress since the commercial real estate market collapsed in second quarter 2008, and as the future unfolds, we expect that the positive returns for commercial real estate will continue,” says Kenneth Riggs Jr., president and CEO of RERC. “The value increase from the trough is now about 30 percent, just slightly less than the value lost during the past 6 years. Although returns are likely to be positive in 2014, we forecast them to be a little lower than in 2013, but still a very reasonable approximate average of 8.75 percent.”

Researchers say they have a “cautiously optimistic” outlook for commercial real estate after recent stabilization, according to the report.

“Overall, we see the potential for moderate and continued growth in the volume of commercial property transactions and in property prices,” says Matthew Kimmel, principal and U.S. real estate sector leader for Deloitte Transactions and Business Analytics LLP.

Lawrence Yun, NAR’s chief economist, says the commercial real estate recovery will continue as economic growth gets slightly stronger in 2014.

“We anticipate the economy to grow at an annual rate of approximately 2.6 percent, with about 2.2 million jobs to be added in 2014,” Yun says. “More jobs mean increased demand for office, retail, apartment, and other commercial real estate sectors.”

—By REALTOR® Magazine

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