Roundtable dials back commercial real estate outlook

The commercial real estate outlook is still positive.

The commercial real estate situation may become more complicated for property management companies in the coming months, due to economic problems and other issues with domestic policy, according to a report from The Real Estate Roundtable.

Sentiment about the commercial market's conditions continued at a high level, as the roundtable's fourth quarter sentiment index rose two points from the previous quarter. Additionally, it was four point higher than the same point one year earlier.

The Current Conditions Index improved to 68, which was four points higher than the third quarter, while the Future Conditions Index remained the same, as it was 64, according to the report. These figures were both far higher than the threshold of 50, which determines if the market is getting better.

Much of the concern around the market's progress – despite improving sentiment – was because of the uncertainty surrounding the presidential election, which could put pressure on the market for the next quarter or two, the report explained.

"In the wake of the Presidential and Congressional elections, industry leaders await how the results will translate into public policies that need to quickly address the nation's economic woes, respond to potential slowdowns in Europe and Asia and generate economic growth in commercial real estate markets outside core 'gateway' areas," said Jeffrey DeBoer, president and CEO of The Real Estate Roundtable.

Values, equity improve year-over-year
Equity and debt availability grew recently, according to the report. However, much of this was centered on the most valuable properties. Even with this in mind, the situation was positive, overall. A respondent noted in the report that the equity and debt availability situation is going well, and this is due to some investors succeeding in acquiring properties in strongly-performing areas. However, looking for strong prices are not likely for Class B properties and anything lower than that level.

The report explained that the asset value situation in the commercial real estate market improved during the quarter compared to the same reading in 2011. Despite the gains, this was underlined as a situation where most of the growth came from the top properties in the most successful markets. Another respondent said there hasn't been a strong trend in pricing changes for the majority of the commercial real estate industry, despite the top properties experiencing some level of progress.

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