Commercial Real Estate Executives Report Improved Current Markets and Caution Ahead
(WASHINGTON, D.C.) — Commercial real estate executives report Q2 market conditions have stabilized since the previous quarter, yet note the future is clouded by concerns about labor shortages, inflationary pressures and the outcome of current policy proposals in Washington, according to The Real Estate Roundtable’s Q2 Economic Sentiment Index released today.
The Roundtable’s Overall Sentiment Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any result over 50 is viewed as positive. This quarter’s Overall Sentiment registered a score of 77.
The Roundtable’s Q2 Current Sentiment score of 78 is a 34-point increase over Q1, reflecting increased vaccination, a reduction in the number of positive COVID tests, and moves to reopen businesses. The current sentiment score also stands in contrast to the economic environment of one year ago, when the current sentiment score hit 13, an 11-year low.
However, sentiment reported in Q2 about Future Conditions registered a flat score of 75 – only one point more than the previous quarter – reflecting continued concerns about the pandemic’s long-term impacts.
Roundtable President and CEO Jeffrey DeBoer said, “Industry leaders are encouraged by the steady progress of vaccinations, rapidly declining infection rates and businesses reopening, but their ongoing concerns over increasing construction costs, inflationary pressures and labor supply have resulted in a more measured outlook.”
“As the long-term economic repercussions of the pandemic remain unclear, Washington lawmakers should prioritize new policies that encourage continued economic growth over initiatives that could hinder the recovery,” DeBoer added.
- An Improvement in Current Market Conditions
Respondents’ views reflect the progress of the national vaccination rollout and improvements in near-term conditions, compared to the economic trough one year ago.
- Increasing Values for In-Demand Asset Classes
Respondents report investors are starting to bid up asking prices for in-demand asset classes such as life science and storage.
- Steady Capital Markets
Most respondents cited accessible capital market for debt and equity, especially when compared to a far more difficult overall market one year ago.