Are you a glass half-full or glass half-empty kind of real estate professional? Me, I like to believe the best—and it looks like I’ve got a couple of hundred companions.
In case you missed Akerman Senterfitt’s second annual U.S. Real Estate Summit last Friday, here’s the takeaway: the industry is optimistic even in the face of ongoing credit challenges.
I’m not much one for numbers, but these numbers—which come from a survey of 200 real estate pros—are worth reviewing:
- 77% have a more optimistic outlook for the real estate market in 2011
- 10% believe a significant amount of financing will come from banks in 2011
- 25% are counting on pension funds to provide financing in 2011
- 71% predicted multifamily would be the most active sector in 2011
- 26% are betting on hospitality
- 27% picked industrial as the most active sector in 2011
The statistics go on and on—and most of it deals with capital issues. But there are also some betting on when the market will return to pre-recession levels.
It’s no surprise that multifamily leads the way. Of all the deals I cover, multifamily may not be the highest-priced assets but they are certainly the most frequent. Asset managers, builders and developers, REITs, regional and national lenders, and private investors expect multifamily to return to recession levels within two years, hospitality and industrial within three years, and office and retail within four years.
Of course, that’s a national perspective. South Florida seems to have some inherent advantages on the multifamily front with the population growth and on the industrial front as the Gateway to Latin America. We could see an even faster recovery in those sectors.
I’m not sure I agree with the retail prediction—nationally yes, but not for South Florida. I’ve been seeing plenty of retail activity, both from the acquisition side and the leasing side, over the past six months. Sure, nationally retail may lag the other sectors. But South Florida, and particularly Miami, has one of the strongest retail markets in the nation. Parts of Miami, in fact, are still underserved.
The bottom line: the signals of a recovery are clear in the commercial real estate industry from sea to shining sea. REITs are investing big dollars, foreign investors are coming back, and private equity firms are getting into the game. But a full recovery will take time—and plenty of access to capital. It’s the latter that, in part, got us into this mess in the first place. My hope is the next round of development—and the financing that makes it possible—will be much more responsible.
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