Tuesday, January 8, 2013
Overall, commercial real estate investors and developers feel more confident about the
industry than in
previous years, speakers said during a webcast titled “The pulse of the
commercial real estate industry,” by PwC. PwC,
along with the Institute, releases
the Emerging Trends in Real Estate, a report based off surveys and interviews,
that has highlighted the industry since 1979. The webcast talked about the
survey and other trends.
“It’s official, we’re in a recovery,” said
DiRocco, PwC’s director of real estate research. But, he said “it’s recovery
anchored in uncertainty.”
Investors have been buying and selling properties in the larger cities, including
San Francisco, New
York and San Jose,
which the survey listed as the top 3 markets to watch. Since the recession hit,
investors have favored the larger cities located near ports, known as 24-hour
But the gateway markets have become crowded and prices for prime properties have risen to near pre-recession levels, DiRocco said.
So investors are moving back into the secondary markets, which include
and Nashville. Raleigh ranks No. 11 on the list of markets to watch; Charlotte is 17th.
Investors are especially interested in cities that have strong high technology, energy, education and healthcare
industries, DiRocco said.
When determining the hot markets, the forecast’s authors focused on markets that can best sustain strong job growth, as well as those boasting strong population growth.
Charlotte got a mention
for its strong net migration - ranking 7th out of the 51 metropolitan areas
“Where the jobs are at -- that is where investors are looking,” DiRocco said.
Some economists have recently said
Charlotte’s economic growth, as well as the
nation’s, has been disappointing. One local economist criticized Mecklenburg County,
and North Carolina,
for adding jobs too slowly. But there have been promising signs of recovery.
While commercial property prices remain well below their pre-recession peaks, for example,
uptown posted a record year for office building sales in 2012. Brokers sold more than
$500 million worth of office buildings, including the iconic .
Brokers involved in the deals say the buyers are national and international
institutions. Hearst Tower
During Tuesday’s 90-minute presentation, moderators stopped to ask the more than 250 participants to answer survey questions. One question asked people which secondary market they would consider acquiring a stabilized office property in during 2013. Respondents could choose from
and San Jose.
In the published forecast, respondents also pinpointed
Charlotte, San Francisco
and Chicago as “market
movers” when it came to new development going forward.
Webcast presenters also addressed the apartment market, which is booming nationally as well as in
Charlotte. Rents are forecast to rise, but DiRocco said the industry
could be getting overbuilt, possibly by 2014 or 2015.
Nationally, retail has lagged most among commercial properties. The retail
is still in recession and might move into recovery in 2014, according to the
“I think investors remain optimistic. They feel the recovery is real. And I think they feel that commercial real estate continues to offer some of the best risk-adjusted returns,” said PwC's Susan Smith, one of the forecast's authors.
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