Global CRE Markets Expected To Heat Up Later This Year

Posted by Orb Staff on March 14, 2012 No Comments
Categories : Commercial Mortgage

Real estate services firm Cushman & Wakefield says activity in the commercial real estate sector will increase during the second half of this year, following a period of sluggishness that accompanied concerns about debt and the overall economy in Europe and the U.S.

‘Despite uncertainties, there remains a well of pent-up demand in most nations,’ says Glenn Rufrano, president and CEO of Cushman & Wakefield. ‘As the year progresses and uncertainty subsides, improving economic conditions will support a boost in commercial real estate activity.’

Cushman & Wakefield latest MarketView report suggests that the main economic and market drivers for the year will be continuing strength in Asia from local demand growth, steady growth in the Americas and weakness in Europe. But for the global economy to improve, there needs to be movement toward resolution of debt issues in Europe and the U.S., or at least rising confidence that a solution will be achieved.

The evolution of the global economy will likely provide opportunities in 2012 for both real estate investors and occupiers, the firm says. De-leveraging will lead to opportunity for investors, as European financial firms come under pressure to dispose of assets to increase capital, with real estate likely to be among the assets sold.

Despite regional differences and weakness early this year, the global office leasing market will experience declining vacancy rates and rising rents in 2012. While the softer global economy is likely to lead to sluggish performance of industrial markets in Asia and Europe, the greatest opportunity is foreseen in North America, where supply growth has been limited and rising demand may lead to higher trade volumes and industrial output.

Cushman & Wakefield also notes that 2011 saw a 14% increase in global investment sales, to $808 billion. For 2012, a 7.5% increase is anticipated, for a total of $867 billion in sales. More product will be brought to market, as institutions are in better positions to dispose of assets. Sales are projected to be flat in Europe and Asia, but investment activity in the Americas is forecast to increase 25% over 2011 levels, to approximately $295 billion.

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