In a new report titled “Commercial Real Estate: Has the Tide Turned?” Credit Suisse’s Customized Funds Investment Group (CFIG) team notes that “while sovereign debt concerns could delay the commercial real estate sector’s recovery in Europe…The U.S. market may be less risky…since the U.S. economic recovery is expected to be more pronounced and more likely to occur before most other developed economy turnarounds”. The authors believe that U.S. investors may be able to take advantage of the situation by “acquiring distressed property; investing in income-generating, value-added real estate, and concentrating on private real estate investments.” However, the researchers did note that this optimistic outlook relies heavily on credit access, noting that the “road to a complete recovery still appears somewhat volatile.”
The research team cited five key factors indicating a commercial real estate turnaround. They are:
- Stabilization of debt markets and the return of commercial mortgage-backed securities (CMBS)
- Property demand improvements
- Commercial property valuation improvements
- “U.S. macroeconomic tailwinds”
- Significant levels of available capital for use in the real estate market
The team also noted that “opportunistic distressed commercial properties” and other income-generating types of property would likely include senior housing, student housing, medical offices and self storage.
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