The U.S. commercial real estate recovery is set to advance in 2013 as modest gains in leasing, rents and pricing will extend across U.S. markets from coast-to-coast and improve prospects for all property sectors, according to the findings of the Emerging Trends in Real Estate 2013 report released by PwC US and the Urban Land Institute.
According to survey participants, U.S. property sectors and markets will register noticeably better prospects as compared with last year, despite a slower-than-normal real estate recovery track. The survey predicts that recent job creation ‘should be enough to increase absorption and push down vacancy rates in the office, industrial and retail sectors, helped by the limited new supply in commercial markets.’ The survey also forecasts a continued ‘robust demand’ for multifamily housing.
The report also predicts a continued embrace of green building movement, with tenants willingly paying high rents in return for more efficient design layouts and lower operating costs. The report also states that while markets grounded in energy and high-tech industries show the most near-term promise, locations that are anchored by major education and medical institutions should perform better over time.
‘With the outlook for commercial real estate continuing to improve in 2013, investors are expected to allocate substantial sums of capital to the real estate asset class, according to our survey respondents,’ says Mitch Roschelle, a partner in the U.S. real estate advisory practice leader at PwC. ‘As yield on bonds and other financial instruments tighten in a still volatile market, commercial real estate's income producing and total return attributes offer investors potentially attractive risk-adjusted returns.’