Wells Fargo economists see "sustained recovery" in commercial real estate

The economic gurus at Wells Fargo & Co. have released their latest outlook for U.S. commercial real estate - and they are seeing promising trends.


As the authors write in their latest commentary: "The case for stronger economic growth has become more compelling."

They say years of easy monetary policy have helped revive the housing market, stabilize commercial real estate values and triggered an increase in merger and acquisition activity. Consumer spending has stood its ground. China's economy is ramping back up and Eurozone economies are expected to stabilize and produce less drag on U.S. growth, they write.


They say the steadily improving fundamentals, combined with low interest rates, are paving the way toward a "sustained recovery" in U.S. commercial real estate.

The apartment market has been booming for a few years now, nationally and in Charlotte. This strong recovery should gradually spill over into other areas, the commentary says.

They also predict that gains in single-family construction will boost prospects for the industrial market, as demand from subcontractors and building materials suppliers revives. Demand for office and retail space will improve less dramatically overall but a handful of markets should see much stronger gains.

The report also says that, according to Real Capital Analytics, troubled properties outstanding declined 15.8 percent in the past year. The pace at which properties fall into distress also has slowed.