The outlook for industrial was more varied, with a Northern Virginia landlord rep citing the positive impact of e-commerce and data centers, while predicting that this trends would continue. In Houston, though, a landlord rep observed that “activity seems to have slowed down temporarily,” while a rep covering the Inland Empire market saw rents stabilizing as demand and supply reached equilibrium.

Although an investment sales rep in Phoenix noted that valuations were beginning to see the effects of rate increases without concomitant spread compression, office brokers surveyed generally saw things looking up, at least in the comments included in the Capital One Securities report. “Rents are rising, Philadelphia is now seen as a great labor market, especially for Millennials, and employers have taken note,” commented a landlord rep in that city. “So the future is bright here.”

In the multifamily sector, a Chicago investment sales rep likely spoke for many. “The multifamily market in Chicago is full of investor demand but higher interest rates and uncertainty over supply and affordability of newly built apartments have most investors proceeding with more caution,” the rep observed. “I personally do not think the market is close to being overbuilt and believe the bigger issue is affordability and the city's inability to thoughtfully encourage workforce or affordable housing.” Capital One Securities conducted the survey among 147 respondents between March 20 and March 26.

Capital One

VIENNA, VA—In a reversal of the previous month's results, Capital One Securities' National Broker Sentiment Survey for March found that current sentiment among the institutional real estate brokerage community had improved. Current conditions averaged 7.3 on a scale of 0 to 10, representing a 0.2 improvement from the previous month, although the “change in current conditions” index ticked downward by 0.1, Capital One Securities said Wednesday. The Mid-Atlantic posted the best regional score; it had posted the lowest one in the previous month's survey. Across the board, retail posted the lowest scores by property type.

Conversely, though, expectations for future business conditions declined 0.3 to 6.5 from 6.8 on a national basis, while change in expectations for future business conditions posted a smaller decline. Capital One Securities analysts Thomas J. Lesnick and Chris Lucas note that by property type, industrial showed the largest drop in expectation of future conditions, while retail evinced the least deterioration overall, suggesting that “the downside in sentiment for retail may be already baked in.”

A pair of comments included in the Capital One Securities report on the latest survey charts the current landscape for retail. “While we're still seeing small shop activity, the recent rash of retail bankruptcies is certainly concerning, as is The Street's very public short position on mall CMBS debt,” observed a regional mall landlord rep based in the Kansas City area. “I'm also closely watching the inflationary pressures that will result from Washington's new agendas (tariffs, immigration restriction, tax cuts, increased defense and infrastructure spending.) While I haven't seen it yet, I look for cap rates and borrowing costs to increase markedly in the long term.”

Another landlord rep, focusing on shopping center owners in Greater Indianapolis, saw a mix of clouds and sun in the forecast. “The latest round of retail bankruptcies and store closures announced in our area has started to and will continue to create a new supply of box vacancies in our area,” the rep commented. “Ten years ago when we faced a similar issue, there were tenants ready to take the space. This time, the list is a lot shorter (at least for now). Interesting times in the world of mid-box and big-box space are about to be upon us! This should be thought of as an opportunity, not a reason to panic!”

The outlook for industrial was more varied, with a Northern Virginia landlord rep citing the positive impact of e-commerce and data centers, while predicting that this trends would continue. In Houston, though, a landlord rep observed that “activity seems to have slowed down temporarily,” while a rep covering the Inland Empire market saw rents stabilizing as demand and supply reached equilibrium.

Although an investment sales rep in Phoenix noted that valuations were beginning to see the effects of rate increases without concomitant spread compression, office brokers surveyed generally saw things looking up, at least in the comments included in the Capital One Securities report. “Rents are rising, Philadelphia is now seen as a great labor market, especially for Millennials, and employers have taken note,” commented a landlord rep in that city. “So the future is bright here.”

In the multifamily sector, a Chicago investment sales rep likely spoke for many. “The multifamily market in Chicago is full of investor demand but higher interest rates and uncertainty over supply and affordability of newly built apartments have most investors proceeding with more caution,” the rep observed. “I personally do not think the market is close to being overbuilt and believe the bigger issue is affordability and the city's inability to thoughtfully encourage workforce or affordable housing.” Capital One Securities conducted the survey among 147 respondents between March 20 and March 26.