Report: Commercial Market to Get Boost in 2013

October 19, 2012

The commercial real estate outlook for 2013 is looking brighter, with modest gains in leasing, rents, and pricing forecasted in PwC US and the Urban Land Institute’s latest report, “Emerging Trends in Real Estate 2013.”

The commercial market is moving forward “bit by bit,” says Stephen Blank, ULI’s senior resident fellow for real estate finance. “Nothing indicates a quick turnaround for commercial real estate, but it is improving. Those who are patient and willing to rethink their expectations and adapt to market realities are expected to come out ahead this year.” 

According to the report, recent job creation will likely increase absorption and push down vacancy rates in the office, industrial, and retail sectors. The apartment sector is forecasted to continue to have strong demand, according to the survey. 

“With the outlook for commercial real estate continuing to improve in 2013, investors are expected to allocate substantial sums of capital to the real estate asset class, according to our survey respondents,” says Mitch Roschelle, U.S. real estate advisory practice leader with PwC. “As yield in bonds and other financial instruments tighten in a still-volatile market, commercial real estate’s income producing and total return attributes offer investors potentially attractive risk-adjusted returns.” 

The five markets with the best commercial real estate outlook for 2013, according to the report, are: 

  1. San Francisco
  2. New York
  3. San Jose, Calif.
  4. Austin, Texas
  5. Houston

Source: “Commercial Real Estate Shows Gains in Leasing, Rents and Pricing,” RISMedia (Oct. 18, 2012)