Optimism over corporations’ rising profit expectations is contributing to an improved outlook for commercial real estate, according to PwC and Urban Land Institute’s 2012 Emerging Trends Mid-Year Update. The 195 industry executives who responded to the survey indicated that profitability, lending, and investor markets are looking up through year-end.
Foreign investors and private equity will remain the top purchasers of commercial real estate through the remainder of the year, according to the survey. However, private local investors and public equity real estate investment trusts buyers acquired an increasing share of properties in 1Q12, according to Real Capital Analytics.
The value of debt capital sources is showing positive signs, with insurance companies occupying the No. 1 spot and government-sponsored entities’ value increasing more than 11 percent since November 2011. Commercial mortgage-backed securities, commercial banks, and mezzanine lenders also posted positive gains.
All five major commercial real estate property sectors also reported higher values, according to the survey. Apartments continue to rank first, followed by the industrial/distribution sector, which posted a significant value increase. Hotels ranked third and logged the biggest gain overall as corporate and individual travel show signs of improvement.