The latest Real Estate Roundtable Sentiment Survey underscores the continuing uncertainty in the real estate marketplace. RER´s Index dropped from 76 points in the second quarter to 74 in the third quarter due to unstable market fundamentals and uncertainty over government policy. In terms of real estate values, respondents reported some improvement in expectations, yet emphasized the gap between valuations for Class A assets and all others. Those factors and the continuing instability of the capital markets continue to cause unease.
“Uncertainty reigns. Whether it is job creation, unstable capital markets or a volatile mix of current policy and the upcoming mid-term elections – investors and businesses are skittish, causing the commercial real estate outlook to be flat. The good news is that last quarter’s view that commercial real estate markets have stopped falling has been confirmed,” reported RER President Jeff DeBoer. BOMA International is an active participant within the Roundtable.
Last week’s Kiplinger Letter projected weaker GDP growth for the year (3.1 percent versus 3.5 percent reported in June), and unemployment remaining virtually unchanged at 9.4 percent. More glimmers of a recovery or green shoots were reported in the form of second quarter numbers showing more office space was leased than vacated nationwide, something that had not happened in the eight previous quarters.
A floor has been established for this re-set economy, but we are still looking for the economic drivers that will lead to new hiring and a growing economy.