Commercial real estate situation may struggle, poll finds

The commercial real estate market may have difficulty as the year continues.

Property management companies may not only have dealt with a significantly lackluster past few months, but the remainder of the year could potentially have more struggles, according to The Real Estate Roundtable.

During the second quarter's report, more than 70 percent of those surveyed said they felt conditions were better than the previous year. However, this has declined to 60 percent, according to the Roundtable's Q3 Sentiment Survey. In addition, only 58 percent think commercial real estate conditions will be improved during the next 12 months. During the second quarter, nearly 70 percent felt that conditions would be better.

"Commercial real estate continues to face pressure from underlying economic problems, along with an erosion of property values and equity throughout much of the country, and a massive amount of loans coming due," Jeffrey DeBoer, president and CEO of the Roundtable. "This survey confirms that policy action is needed to restore a climate for job creation, to spur long-term business investment, and to help bridge the equity gap hindering the refinancing of hundreds of billions in maturing commercial mortgages."

The Roundtable's Sentiment Index declined to 63 during the third quarter, which was far below the second quarter's 70. This was the first decline since the middle of last year. The current index reading dropped to 64, which was lower than the second quarter's figure of 71 and the first quarter's 66.

Many of the declines found in the report were because of tempered projections by the federal government regarding the economy. Job growth and economic improvements tapered off, as well. The futures index declined for the second time this year because of this, to a level of 62. During the second quarter, the figure was 69, and it was 70 to start the year.

"Given the pervading sense of uncertainty hanging over the economy, the elections, looming budget and tax issues awaiting action on Capitol Hill, increasingly complex and overlapping regulatory burdens, and escalating worries about the eurozone, it's not surprising that commercial real estate executives' expectations for the year ahead are relatively lackluster," DeBoer noted.

He added that the federal government may need to do more to stimulate the job market, as this will help businesses grow and improve lending for commercial real estate.

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