Commercial real estate market investment to rise next year

Commercial real estate investment should improve next year.

More investors may become involved with the commercial real estate market next year, which may help property management companies feel more comfortable about the market's recovery prospects.

There are still some issues that directly affect recovery, but even with slow economic expansion and the concerns of a "fiscal cliff," there is much to be confident about, the report from PricewaterhouseCoopers explained. Through 2015, multiple property sectors should experience improvement, with this beginning to pick up investment levels next year.

The retail, multifamily, office and retail sectors will all see higher investment levels in the next several months, with the multifamily market benefiting from a still-high demand level, as well as many consumers still hesitant to take out a mortgage, instead opting for rental units, the firm's Real Estate Investor Survey explained. The office sector should see a heightened level of absorption, despite the struggling job market.

Retail may strengthen further as more investors show interest in shopping malls, and this may rise next year, according to the report. Additionally, there was a recent drop in capitalization rates, overall.

The industrial market already experienced significant improvements in occupancy, and this should continue through next year, the report said. This sector should also become more important in economic and market recovery, as well.

"Foreign investors are particularly bullish on U.S. commercial real estate as they look for stable investments during uncertain times abroad," said Mitch Roschelle , partner and U.S. real estate advisory practice leader for PwC. "In 2013, survey respondents expect to see an uptick in sales activity as property owners cull portfolios to take advantage of the low cap rate environment. And as investment capital continues its trend of matriculating beyond just apartments, cap rates are expected to compress across the entire asset class."

Commercial real estate conditions to improve next year
There are many other positives to look for in the commercial real estate market in the next several months. According to the National Association of Realtors, economic growth should improve further next year, which could help the commercial real estate situation.

Vacancy levels for office properties should drop 1 percentage point through next year, while the industrial market will see a decline of 0.6 percentage point. The multifamily market will drop 0.1 percentage point, and the retail market will fall 0.2 percentage point.

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