CRE forecast projects positive potential growth through 2015

Commercial real estate market improvements should occur in the coming years.

Commercial property managers may be happy with the progress of market recovery to this point, but there are further projected improvements, which may be a significant boost to their confidence in the next few years.

The transaction volume for the commercial real estate market is projected to reach $310 billion this year, which would be a notable improvement from the previous year's figure of $290 billion, according to a report from the Urban Land Institute and Ernst & Young, and compiled by the ULI Center for Capital Markets and Real Estate. This year's projection may be bested next year, as $340 billion could be invested into the market. This could rise in 2015 to a total of $360 billion.

Much of the gains may be due to the gradually strengthening economic situation. The Gross Domestic Product should improve by 2 percent in 2013, while this may jump to 3 percent next year, the Real Estate Consensus Forecast from the two organizations noted. The figure may slightly rise in 2015, to approximately 3.1 percent.

"Institutional global capital is searching for a home that provides the best risk adjusted return, without regard for borders," said Howard Roth, global real estate leader for Ernst & Young. "As the consensus of the economists participating in our survey confirms, the U.S. capital markets, the housing sector, and commercial real estate fundamentals are clearly improving, trends which we believe places the U.S. real estate sector squarely in the sights of global investors for the foreseeable future."

Unemployment may also decline, as this year it is projected to fall to 7.5 percent, the report added. By 2014, it may fall to 7 percent, and finally to 6.5 percent in 2015.

CRE mortgage delinquencies fall to end 2012
Continued gains projected in the commercial market may be helped by the continued declines in overall mortgage delinquencies during the fourth quarter of last year.

The total delinquency rate for multifamily loans 60 or more days past due and held by government-sponsored enterprises Freddie Mac and Fannie Mae fell to 0.19 percent and 0.24 percent, according to the Commercial-Multifamily Delinquency Report from the Mortgage Bankers Association. Loans 90 or more days past due and held by banks and thrifts also declined during the final three months of 2012, as the rate was 2.62 percent.

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