In an April survey of NAIOP Forum members, the general consensus is “the future is now” or more accurately, on the horizon. The majority believe the United States economy has turned the corner and is on the road to a sustainable recovery. This perception is fairly widespread, although the outlook is tempered by the realization that the economy faces a number of challenges both domestically and globally that pose some downside risk.
Despite recognizing these risks, many real estate professionals believe that the improving economy is setting the stage for a gradual, somewhat lagged recovery in the commercial real estate market. At the same time, they are reporting moderate improvements in capital market conditions and capital flows which are helping the real estate market gain some traction as evidenced by increasing transaction volume, capital flows and underlying market conditions. This generally positive outlook is being evidenced by a growing sense of optimism surrounding the prospects for development, although such enthusiasm is appropriately tempered. It is expected that economic conditions will continue to improve overall. However, before the real estate market benefits from a broad-based recovery, we will have to have job growth, a new round of business investment and ultimately consumer spending. Even when that occurs, the industry will be characterized by more discipline and greater reliance on analytics than in the recent past, which will pose some short-term challenges that will have to be overcome but will translate to a more stable market over the long-term.
The NAIOP Confidence survey was developed in collaboration with NAIOP Corporate staff as well as an ad hoc advisory committee. The committee helped develop four key areas for the survey to address: economic conditions, capital markets, real estate industry outlook and trends.
The survey results suggest the industry will ultimately emerge in a more disciplined and sustainable manner. So, the future is getting closer.