“I think fundamentally, the market and the economy are in balance, assuming no outside event,” commented one respondent. “The returns we've been able to enjoy will be narrower going forward. We are still feeling positive about the market.”

While 45% of survey participants said asset prices are now “much higher” compared to one year ago, 51% expect generally flat valuations in a year's time, due partly to peak pricing for certain property types. Some respondents noted that inflows of private capital currently favor equity to debt, depending on the quality of the property. Respondents also cited the increasingly challenging environment for construction financing.

Data for the Q4 survey were gathered in October by Chicago-based FPL Associates on behalf of the Roundtable. For the full survey report, visit www.rer.org.

WASHINGTON, DC—Market conditions have remained steady throughout a year marked by economic and political turbulence and commercial real estate industry executives expect to close out 2016 on an even keel, according to the Real Estate Roundtable's Overall Q4 Sentiment Index, released Thursday. That being said, the three indices derived from the Roundtable's Sentiment Surveys represent a falling-off from the year-ago period.

The Overall Sentiment Index—an average of the Current-Conditions Index and Future-Conditions Index in which a score above 50 is viewed as positive—registered registered at 48, down just one point from Q3 but off nine points from Q4 2015. The Current-Conditions Index held steady at 51, yet was down 11 points from a year ago. Q4's Future-Conditions Index of 46 represents a two-point decrease from the prior quarter and a six-point drop over the past 12 months.

“With the year drawing to a close during a tumultuous election cycle, responses to market conditions within our Sentiment Surveys showed consistency through all four quarters, reflecting steady growth and balanced markets,” says Jeffrey DeBoer, the Roundtable's CEO and president. “As moderate economic growth faced headwinds of political uncertainty and international volatility throughout 2016, leaders in CRE now await the policy consequences of the upcoming national elections in anticipation of the economy's future direction.”

General sentiment about the US market ranges from neutral to positive even amid rising concerns about pricing and debt, according to the Roundtable. While gateway cities are viewed as having passed their peak on values, as have certain asset types, value-add investors are seeing opportunities in many secondary and tertiary markets. Similarly, economic growth is viewed as positive, albeit gradual.

“I think fundamentally, the market and the economy are in balance, assuming no outside event,” commented one respondent. “The returns we've been able to enjoy will be narrower going forward. We are still feeling positive about the market.”

While 45% of survey participants said asset prices are now “much higher” compared to one year ago, 51% expect generally flat valuations in a year's time, due partly to peak pricing for certain property types. Some respondents noted that inflows of private capital currently favor equity to debt, depending on the quality of the property. Respondents also cited the increasingly challenging environment for construction financing.

Data for the Q4 survey were gathered in October by Chicago-based FPL Associates on behalf of the Roundtable. For the full survey report, visit www.rer.org.