Akerman survey finds steady commercial optimism

MIAMI – March 13, 2014 – Investor and lender confidence in the U.S. commercial real estate market is reaching new heights since the market collapse, according to a survey conducted by Akerman LLP, a large U.S. law firm serving clients across the Americas.The Akerman Real Estate Industry Outlook Survey finds that domestic investors have a stronger appetite for real estate assets than in recent years. Capital availability from a wide range of equity sources also is expected to improve in 2014, with increased activity by institutional forces.Akerman says the survey echoes comments made by the nearly 300 CEOs, COOs and other top industry executives who attended the Akerman Summit in Miami on Friday, March 7.Increased confidence and capital flowsA majority (70 percent) of real estate executives reported a more optimistic outlook about the market in 2014 than in 2013. They foresee increases in capital availability from all sources except government entities.Private equity is predicted to drive U.S. commercial real estate financing in 2014 with real estate investment trusts (REITs) the leading source of real estate debt and/or equity funding, though banks should also boost funding.Confidence in the banking industry as a primary source of commercial real estate financing increased by 34 percent since 2011. The commercial mortgage-backed securities (CMBS) market is also expected to play a more pronounced role in the upcoming year.Sector strength and foreign investmentThe consensus among real estate executives is that the multifamily sector will see the most real estate transactions in 2014 – a consistent trend for the last four years. Respondents also predict that the industrial sector will see an influx of activity, closing the second most deals during the year, followed by the retail, hospitality and office sectors.Executives also expect the U.S. to remain a top global investment destination, with a third of respondents expecting an increase in foreign spending in 2014.More than half of executives say that the multifamily sector will be the most active market for U.S. foreign investment, with most capital coming from Europe. In the hospitality and industrial sectors, about half predict that investment will come from Latin America, while capital sources in the retail and office sectors will come mainly from Europe and China.Just over half of real estate executives (51 percent) say that the greatest increase in Latin American real estate investment in the U.S. will come from Brazil. Executives made a similar prediction last year.Lingering uncertaintyDespite increased optimism in the U.S. commercial real estate market, government shutdowns and future government spending continue to mute executive confidence. More than half of survey respondents cited government policies and Congressional gridlock (collectively 52 percent) as primary reasons for their lack of confidence.For the past three years, U.S. policies, availability of credit and refinancing challenges have topped the list of executives’ most pressing issues. Concerns about refinancing challenges decreased by 20 percent since the 2011 Akerman Survey; the uncertainty of government policies has increased by 7 percent. Global economic uncertainty also continues to be a concern (25 percent).© 2014 Florida Realtors®