Robert Bach, senior vice president and chief economist at Grubb & Ellis in Indianapolis, addressed the Wichita Independent Business Association's annual meeting at the DoubleTree by Hilton Wichita Airport this week to discuss the current state and outlook of commercial real estate. "Overall, I'm pretty optimistic about commercial real estate markets," he told roughly 200 people gathered for the meeting.
The Wichita Business Journal reports that according to Bach, commercial real estate struggled during the recession, with average prices falling by 44 percent between October 2007 and October 2009. However, the market has significantly improved since then, he said, and returns for commercial real estate investors are fairly attractive in the current low-interest-rate environment.
Bach predicted that cap rates will drop this year which, along with slowly increasing rents across sectors, would have properties throwing off more income. He noted that lower prices have enticed tenants to take advantage of the opportunity to upgrade at lower prices, and that industrial space has performed well in the face of manufacturing growth and years of improved efficiencies.
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