News

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5 Oct 2011

Survey reveals uncertain 12-month outlook for the US commercial real estate market

Press Release

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The clouds of uncertainty have returned to the US commercial real estate industry following a strong start to 2011, according to DLA Piper's 2011 State of the Market Survey.

Volatile global financial markets, solvency concerns throughout the Eurozone, stagnant US job growth and gridlock between the White House and Congress have led to a pullback in optimism following a variety of upbeat indicators and reports that characterised the first eight months of the year.

The survey, measuring the attitudes and perspectives of 291 top executives within the US commercial real estate market, reveals 7 out of 10 respondents describe themselves as 'bearish' for the next 12 months.

'The spike in optimism we witnessed earlier this year appears to have reversed course as real estate executives are searching for certainty in a marketplace that has been greatly impacted by global economic volatility, a polarised political environment and stagnant US job production,' according to the Co-Chair of DLA Piper's Global Real Estate Practice, Jay Epstien.

Locally, the outlook is remarkably similar, according to DLA Piper's Head of Real Estate in Australia, Tom Cantwell.

'With foreign buyers a key part of the market, the global uncertainty has been reflected by a slowing in Australia,' Cantwell says.

'With the prospect of prolonged political and financial uncertainty, it is difficult to predict which way the market will head.'

The DLA Piper survey yielded a number of other interesting conclusions, including:

• The three top-ranked regions for investment opportunity are Brazil, China and India.
• Respondents expect private equity (35%), foreign investors (25%) and pension funds (20% to be the most active in the next year, followed by REITs (16%).
• 9 out of 10 respondents expect a cooling of the US commercial real estate market during the remainder of 2011, predicting volumes to crest well below US$40 billion by the end of the year.