Commercial Real Estate Set to Scale New Heights

NEW YORK--()--Commercial real estate, already high on the radar screens of investors trying to balance relative safety and returns, is expected to continue to increase in value and pricing during 2015, according to the authors of Expectations & Market Realities in Real Estate 2015—Scaling New Heights, an annual forecast report released by RERC, LLC a Situs company (RERC), Deloitte, and the National Association of REALTORS® (NAR).

These organizations have drawn on their respective capabilities to examine the economy, capital markets, and commercial property markets; thoroughly assess and analyze the research; and offer an objective outlook for commercial real estate for the year ahead. Findings indicate that while challenges remain, the U.S. commercial real estate market has been buoyed by strong demand, improving real estate fundamentals, and still-low interest rates. These trends are expected to continue for the near term.

“We are at an inflection point with respect to the price and value of commercial real estate,” stated Kenneth Riggs, RERC president. “Thus far, price and value seem to be balanced, but no one can guarantee that these recent high real estate prices and values are sustainable. For now, many investors are willing to pay extremely high prices for the value that commercial real estate brings, and it appears that broad market prices and values have room to increase for another 12 to 18 months.”

“Compared to the rest of the global economy, the U.S. real estate market is one of the preferred destinations for investment capital. Not only does commercial real estate provide a sense of safety, it is transparent, tangible, and can serve as a hedge against inflation on a long-term basis,” noted Matthew Kimmel, principal and U.S. real estate services leader at Deloitte Transactions and Business Analytics LLP. “On a risk-adjusted return basis in certain North American markets — and especially in the U.S. — performance has exceeded other developed global CRE markets.”

Lawrence Yun, Ph.D., chief economist with NAR, notes that a faster-growing economy and the stronger job growth we have seen recently is the best prescription he could provide for the commercial real estate market. “More jobs mean increased demand for office, industrial, retail, and other commercial real estate sectors. Add to that the relief that consumers are receiving from lower fuel costs, and we can expect that investors will look further beyond the primary markets and into late-recovering secondary market for real estate investments with good value and opportunity.”

“Broadly speaking, commercial real estate has more than recovered the value it lost during the recession, and whether one is using equity or debt investment capital, the investment environment will likely remain very attractive as long as U.S. Treasury rates and interest rates remain low,” said Constantine Korologos, managing director, Situs. “We expect investors to continue to purchase real estate, for prices to continue to increase, and for values to continue to chase prices. And for investors, that is a pretty good place to be.”

To download the report please click here: http://www.situs.com/expectations-and-market-realities-in-real-estate-2015-scaling-new-heights.

About RERC, a Situs company

RERC was founded in 1931 and was purchased by Situs in 2014. RERC is recognized throughout the industry as one of the nation’s most respected firms dedicated to valuation management, appraisal and litigation services, and research, analytics, and publications. RERC, an SEC-registered investment advisor, has provided valuation management and independent consulting services throughout the U.S. for all major property types. Quarterly capitalization rates and other investment criteria and independent analysis are presented for 10 major property types for the institutional and regional commercial real estate markets, as well as for 48 major metropolitan markets, in the RERC Real Estate Report. RERC is a wholly-owned subsidiary of Situs Group LLC, one of the Situs companies.

About Situs

Situs, the premier global provider of end-to-end strategic business solutions and integrated process and technology solutions for the Financial Services Industry, has offered customized services to leading financial institutions, investors, owners, and developers since 1985. Situs offers a broad portfolio of strategic solutions including Debt Advisory, Loan Servicing, Consulting & Staffing, Valuation Management, Business Process Outsourcing, and Asset Management, among others.

Situs’ business provides customized solutions that mitigate deal execution risk for clients while maximizing operating margins. Situs is headquartered in Houston and has offices throughout the United States, Europe, and Asia.

Deloitte

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

National Association of REALTORS® (NAR)

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.

MEDIA Contacts:

Complimentary copies of the report are available to the media upon request.

Situs & RERC: Jon Brubaker, jon.brubaker@cognitomedia.com or 646-395-6300

Deloitte: Chris Faile, cfaile@deloitte.com or 212-436-5170

NAR: Jane Dollinger, JDollinger@realtors.org or 202-383-1042

This publication contains general information only and is based on the experiences and research of the authors. The authors are not, by means of this publication, rendering business, financial, investment, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. The authors, their employers, employers’ affiliates and related entities shall not be responsible for any loss sustained by any person who relies on this publication.

Contacts

Situs & RERC:
Jon Brubaker, 646-395-6300
jon.brubaker@cognitomedia.com
or
Deloitte:
Chris Faile, 212-436-5170
cfaile@deloitte.com
or
NAR:
Jane Dollinger, 202-383-1042
JDollinger@realtors.org

Release Summary

Commercial real estate, already high on the radar screens of investors trying to balance relative safety and returns, is expected to continue to increase in value and pricing during 2015.

Contacts

Situs & RERC:
Jon Brubaker, 646-395-6300
jon.brubaker@cognitomedia.com
or
Deloitte:
Chris Faile, 212-436-5170
cfaile@deloitte.com
or
NAR:
Jane Dollinger, 202-383-1042
JDollinger@realtors.org