May 16, 2019
Commercial real estate executives expressed increased optimism about real estate markets and overall economic conditions, according to the latest research by The Real Estate Roundtable. The 2019 Q2 Sentiment Index registered 51, a six-point increase from the previous quarter. The Index has registered between 50 and 55 every quarter since Q1 2017 – except Q1 2019.
Real Estate Roundtable’s Jeffrey DeBoer says, “The increase in our Q2 Sentiment Index can be largely attributed to a calming of the late 2018 capital market volatility and interest rate concerns. Debt and equity continue to be widely available for quality commercial real estate investments.”
DeBoer added, “At the same time, strong lending underwriting is keeping uneconomic new development in check. This positive situation has positioned the commercial real estate industry on solid footing to respond to a continuing growing economy, or to mitigate the impact of a natural slowdown in the current historically long economic cycle.”
- The Real Estate Roundtable Q2 2019 Sentiment Index registered 51 – a six point increase from the previous quarter. Survey participants expressed increased optimism that real estate markets will remain healthy as positive economic conditions persist. Respondents are encouraged by the resilience of the market, but have questions about the length of the overall economic cycle.
- Many respondents expressed caution around the late cycle timing, but they also pointed to a high level of discipline on behalf of equity and debt providers. Lending standards have remained rigid and underwriting of new deals has been thoughtfully executed.
- Respondents suggested that asset values for certain property types may be approaching peak. The perceived gap between buyer and seller expectations supports this view.
- Debt and equity are viewed as widely available for quality investments. Despite plenty of capital flowing into the market, respondents pointed to the discipline exhibited by lenders as a factor contributing to their market confidence.
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