The commercial real estate recovery is anything but even, according to the board chair of the Counselors of Real Estate, John Leary, who addressed the issue at the annual conference of the National Association of Real Estate Editors (NAREE) earlier this week. Leary described the current commercial market as “two-tiered,” with “strong, well-located assets trading at prices close to where they were before” while other assets, sometimes just miles away from the trophy properties, “are not trading or being held off the market because nobody wants to take that level of loss.” Leary added that “downtowns, in-town neighborhoods and inner-ring suburbs close to the city” are attracting a great deal of investor interest while suburban markets are still suffering. He believes that the demand for walkable, more urban environments is likely on the rise thanks to demographic trends “led by the Baby Boomers and Generation Y.”
On the whole, despite the uneven nature of the recovery, a surveys seem to indicate that commercial real estate investors remain optimistic about the recovery despite ongoing issues with the economy. In fact, a “lack of new supply and low interest rates” are actually driving up investor interest in the sector, reported PriceWaterhouseCoopers LLP. The fact that there will likely be “very few additions” to the commercial property market supply in the short term is also contributing to the absorption of space, PwC reported, adding that tenant demand would likely increase in the coming months.
Do you think that this type of uneven recovery can ever reach fruition, or does something have to happen with those less-attractive buildings before things can truly get going again?
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