Industry executives currently have a “modestly optimistic” outlook on the U.S. commercial real estate market, as economic fundamentals show slow yet steady improvement, according to the latest Sentiment Index from The Real Estate Roundtable. However, public policy uncertainties and concerns over a potential rise in interest rates cast doubts on the market’s future.
“Commercial real estate executives are seeing increased interest in transactions outside healthy core markets, but that sliver of good news is mired in anxiety, centered on whether the development of pro-growth policies could fall victim to political gridlock,” says Jeffrey DeBoer, president and CEO of the Real Estate Roundtable.
The company’s survey for the second quarter of 2013 reveals an overall Sentiment Index of 69 – unchanged from the previous quarter and one point lower than in the second quarter of 2012. The overall index score is based on the average of two indices: the Current Conditions Index (which stands at 71, up one point from the previous quarter) and the Future Conditions Index (67, unchanged since the first quarter).
Figures above 50 indicate a positive market trajectory, the Real Estate Roundtable notes. This quarter’s index indicates that senior commercial real estate executives continue to see favorable trends in both values and capital availability in major gateway markets, but remain nervous about how a potential rise in interest rates and political uncertainty could worsen market conditions.