Commercial Real Estate Market Continues to Thrive
By Tonie Auer, Southwest Correspondent
Thursday, February 22 2007
Thursday, February 22 2007
Published on AllBusiness.com
The outlook for the commercial real estate market continues to look good for 2007, according to several different organizations, which have looked at the data and surveyed developers and brokers.
A forward looking index for the commercial real estate market, the Commercial Leading Indicator for Brokerage Activity, increased for seven consecutive quarters and has held at the highest level on record, according to the National Association of Realtors. The indicator rose 0.1 percent in the fourth quarter to a level of 120.1 from an index of 120.0 in the third quarter, and is 1.8 percent above the fourth quarter of 2005, when it stood at 118.1.
In another report, despite an unprecedented run-up in the price of real estate assets and signs that job growth is slowing, a majority of investors still plan to increase their commercial real estate holdings in 2007, according to the results of a survey conducted jointly by National Real Estate Investor and Marcus & Millichap Real Estate Investment Brokerage Co.
Among the 1,042 private and institutional investors surveyed, 60 percent plan to boost their investment in the commercial real estate market by an average of 19 percent over the next 12 months, according to the survey. Those figures are lower than in last year's survey, when nearly 70 percent of respondents indicated plans to increase their investment in commercial real estate.
After growth in 2005 and 2006, the slight rise in the index means net absorption of space in the industrial and office sectors should be fairly steady over the next six to nine months, with modestly higher completions of overall office, warehouse, retail and lodging structures, according to the commercial leading indicator information.
Net absorption in the office and industrial sectors in the second quarter of 2007 is expected to be 5 million to 15 million square feet, with about $315 billion to $320 billion in new completed commercial construction activity, compared with $311 billion of new construction recorded in the fourth quarter of last year, which means commercial real estate practitioners can anticipate leasing and sales activity in the second quarter of this year to be approximately 1.8 percent higher than the same quarter a year ago.
A forward looking index for the commercial real estate market, the Commercial Leading Indicator for Brokerage Activity, increased for seven consecutive quarters and has held at the highest level on record, according to the National Association of Realtors. The indicator rose 0.1 percent in the fourth quarter to a level of 120.1 from an index of 120.0 in the third quarter, and is 1.8 percent above the fourth quarter of 2005, when it stood at 118.1.
In another report, despite an unprecedented run-up in the price of real estate assets and signs that job growth is slowing, a majority of investors still plan to increase their commercial real estate holdings in 2007, according to the results of a survey conducted jointly by National Real Estate Investor and Marcus & Millichap Real Estate Investment Brokerage Co.
Among the 1,042 private and institutional investors surveyed, 60 percent plan to boost their investment in the commercial real estate market by an average of 19 percent over the next 12 months, according to the survey. Those figures are lower than in last year's survey, when nearly 70 percent of respondents indicated plans to increase their investment in commercial real estate.
After growth in 2005 and 2006, the slight rise in the index means net absorption of space in the industrial and office sectors should be fairly steady over the next six to nine months, with modestly higher completions of overall office, warehouse, retail and lodging structures, according to the commercial leading indicator information.
Net absorption in the office and industrial sectors in the second quarter of 2007 is expected to be 5 million to 15 million square feet, with about $315 billion to $320 billion in new completed commercial construction activity, compared with $311 billion of new construction recorded in the fourth quarter of last year, which means commercial real estate practitioners can anticipate leasing and sales activity in the second quarter of this year to be approximately 1.8 percent higher than the same quarter a year ago.
