Kenneth Riggs, chief real estate economist for CCIM Institute and chairman and president of Real Estate Research Corp. in Chicago, published a market forecast titled 2012 Expectations and Realities. An excerpt:
Although 2012 is expected to remain lean, the commercial real estate investment market has a strong foundation to remain a leading and well-respected investment alternative for the next 10 years.
Economy: Look for a modest economic recovery versus the go-go years immediately preceding the recession. Economic growth is forecast at 2.0 percent in 2012. Consumption is forecast to grow 1.8 percent in 2012, while the National Association of Realtors forecasts government spending growth at -0.5 percent in 2012. Use the slow pace of economic growth in 2012 to build a strong foundation for slightly improved growth in 2013.
Office: With office completions remaining at roughly half the pace of absorption, expect the office sector vacancy rate to decline to approximately 16.6 percent by year-end, according to Reis. However, with job creation remaining weak, rents are not expected to increase significantly.
Industrial: Unless economic conditions deteriorate further, the national industrial property market should continue to strengthen in 2012. Net effective rents have stabilized and are increasing for large class A distribution buildings, but broad-based rent growth is unlikely to commence for at least another year.
Retail: Look for retail sales to bump along at modest levels in 2012, with retailers continuing to reposition stores to take advantage of favorable rental rates or expansion plans. Properties such as grocery-anchored centers will continue to outperform the rest of the retail sector due to consumer spending habits.
Click here to read "Shelter From the Storm," the complete 2012 commercial real estate forecast in the January/February 2012 CIRE. For more news and information visit Blumberg Capital Partners.
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