WASHINGTON, DC—Two consecutive quarters of political turbulence and lack of regulatory change have eroded commercial real estate executives' optimism, but they remain essentially upbeat, according to the Real Estate Roundtable's Economic Sentiment Index for the third quarter. “In the face of geopolitical uncertainty, we continue to believe that the real estate industry will navigate headwinds and maintain a positive path forward,” says Jeffrey DeBoer, the Roundtable's president and CEO. “As our Q3 Index shows, our industry leaders continue to conduct business, asset values are stable, equity capital is widely available and debt funds have stepped in to fill the void for the lack of construction financing we have been experiencing over the past year.”

Overall, the index came in at 50, down two points from the Q2 index, although still in positive territory. The Current Conditions Index of 51 and the Future Conditions Index of 48 both represented two-point drops from the previous quarter.

Some of that decline in respondents' confidence reflects trepidation on the part of their tenants and/or clients. The Roundtable says that although most survey participants see market fundamentals as strong, they're seeing client hesitation about decision-making owing to uncertainty about market conditions and trepidation about the Trump administration.

“After the election, transactions slowed,” one respondent commented. “Trophy assets paused in trading; there was a sense of everyone waiting to see what might happen next. At this point in the year, it seems like we don't have much additional clarity. With no certainty of change, people have picked up and carried on.”

Most survey respondents believe that high quality assets in primary markets have reached peak pricing, while a few think that prices may be beyond peak. Forty-three percent of survey participants said asset prices today are “somewhat higher” compared to a year ago, compared to just 17% who believe prices are lower now. However, the Roundtable notes that with 55% of respondents saying they expect values to be “about the same” in a year's time, pricing may remain steady over the course of the next year.

“Despite the continued slow but steady course the real estate industry has been on, Washington policy makers must focus on bipartisan growth-oriented policies for the future,” says DeBoer. “The Roundtable will continue to work with policy makers by sharing thoughtful, long-term views about policy initiatives that will continue to provide our industry and the US economy with much-needed policy reform in Washington.”

Data for the Q3 survey was gathered in July by Chicago-based FPL Associates on the Roundtable's behalf. Results from the next survey will be issued in early November.

WASHINGTON, DC—Two consecutive quarters of political turbulence and lack of regulatory change have eroded commercial real estate executives' optimism, but they remain essentially upbeat, according to the Real Estate Roundtable's Economic Sentiment Index for the third quarter. “In the face of geopolitical uncertainty, we continue to believe that the real estate industry will navigate headwinds and maintain a positive path forward,” says Jeffrey DeBoer, the Roundtable's president and CEO. “As our Q3 Index shows, our industry leaders continue to conduct business, asset values are stable, equity capital is widely available and debt funds have stepped in to fill the void for the lack of construction financing we have been experiencing over the past year.”

Overall, the index came in at 50, down two points from the Q2 index, although still in positive territory. The Current Conditions Index of 51 and the Future Conditions Index of 48 both represented two-point drops from the previous quarter.

Some of that decline in respondents' confidence reflects trepidation on the part of their tenants and/or clients. The Roundtable says that although most survey participants see market fundamentals as strong, they're seeing client hesitation about decision-making owing to uncertainty about market conditions and trepidation about the Trump administration.

“After the election, transactions slowed,” one respondent commented. “Trophy assets paused in trading; there was a sense of everyone waiting to see what might happen next. At this point in the year, it seems like we don't have much additional clarity. With no certainty of change, people have picked up and carried on.”

Most survey respondents believe that high quality assets in primary markets have reached peak pricing, while a few think that prices may be beyond peak. Forty-three percent of survey participants said asset prices today are “somewhat higher” compared to a year ago, compared to just 17% who believe prices are lower now. However, the Roundtable notes that with 55% of respondents saying they expect values to be “about the same” in a year's time, pricing may remain steady over the course of the next year.

“Despite the continued slow but steady course the real estate industry has been on, Washington policy makers must focus on bipartisan growth-oriented policies for the future,” says DeBoer. “The Roundtable will continue to work with policy makers by sharing thoughtful, long-term views about policy initiatives that will continue to provide our industry and the US economy with much-needed policy reform in Washington.”

Data for the Q3 survey was gathered in July by Chicago-based FPL Associates on the Roundtable's behalf. Results from the next survey will be issued in early November.