INDUSTRY NEWS: Survey Weighs Future of Sector Performance
5/14/2008 11:59:34 AM
Source: GlobeST.com
The most positive outlook came from those surveyed regarding the multifamily sector, which many felt provided the "best potential" to outperform. A resounding 52% were predicting upward movement from zero to 30% over the last year. An optimistic 16% of respondents think multifamily investments will "outperform the previous year at 75% or more." Those that felt multifamily investments will fall zero to 10% totaled 22%, while no one thought it would fall by 20% or higher.
"While the fundamentals in commercial real estate have remained strong, one would think concerns of a faltering economy combined with a lack of affordable debt would decrease market expectations for 2008," says Jack Minter, Managing Director of Investment Sales at Jones Lang LaSalle, in a statement. The opinions for the retail-investment sector did not disappoint in this regard. Retail garnered the most negative reviews with 44% of those surveyed predicting it will underperform in 2008 from zero to 20%. Another 16% feel retail will underperform by 20% or more. Although a positive group of 12% "believe retail will secure a performance premium of 75%" or more than last year, they find themselves in the vast minority.
The industrial and office sectors were less dramatic in their results. Those surveyed gave a moderate review for industrial with 13% saying it will outperform 2007 by 75% or more and 15% saying it will underperform by 10% or more. The majority of respondents, at 33%, predicted a zero to 10% underperformance for industrial. The office sector inspired an evenly split prediction, as well with 42% predicting that it will underperform from zero to 20% and 30% thinking it will bring "a performance premium of zero to 30%". Related to 2007, 14% say they think office "will outperform at 50% or more".
Minter said, of the responses, "These survey results reveal the true picture with 45% of respondents expecting to increase their investment/development activity. This survey indicates what many in the industry have been feeling--the market is holding steady."