Despite Positive Sentiment About Q3 and Future Market Conditions, Industry Remains Cautious

(WASHINGTON, D.C.) — Commercial real estate industry leaders continue to see balanced and stable economic market conditions, according to The Real Estate Roundtable’s 2019 Q3 Sentiment Index released today. 

“As our Q3 Index shows, industry executives are entering the second half of the year with confidence in stable market fundamentals, supported by a solid economy with low employment,” said Real Estate Roundtable President and CEO Jeffrey DeBoer. “Although there is political uncertainty and the economic recovery is historical in length, commercial real estate market dynamics remain sound, with balanced supply and demand in most markets, and debt and equity readily available, particularly for high grade investments,” DeBoer added.

The Roundtable’s Q3 2019 Sentiment Index’s registered a score of 50 — a one point decrease from the previous quarter. [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.]  Both the Current-Conditions Index of 53 and Future-Conditions Index of 48 for this quarter remained the same from the previous quarter, reflecting the stabilized real estate market conditions and the overall economy.

The report’s Topline Findings include:

• The Real Estate Roundtable Q3 2019 Sentiment Index registered a score of 50 – a one point decrease from the previous quarter. Survey participants are confident in today’s market dynamics. However, many respondents feel the US real estate market has become fragmented during this cycle and is more accurately examined as a group of separate but correlated markets distinguished by geographic location and property type.
  
  
• Many respondents feel a change in the market is imminent, but are unable to identify a definitive potential cause for a decline as they recognize economic fundamentals appear strong. Nearly half of respondents suggested market conditions one year from now would be similar to the prevailing conditions today.

• Asset prices remain high for the best assets in the best locations. Many question whether the real estate cycle may be nearing an end and prices could decline in the near future. Sixty percent of respondents believe real estate asset values will be the same one year from now.

• Availability of debt and equity capital remains strong for high grade investments. Respondents identified a trend of renewed construction financing availability from financial institutions which had previously pulled back from the market.

While 50% of survey participants reported Q3 asset values today are “about the same” compared to this time last year, 60% of respondents believe that one year from now, values will be “about the same” suggesting real estate asset pricing will remain steady through the remainder of the year. Some respondents believe there is still opportunity for growth for high quality assets in certain markets. 

Data for the Q3 survey was gathered in July by Chicago-based FPL Associates on The Roundtable’s behalf. 

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