CRE Execs Mostly Optimistic About MF
- Mar 13, 2014
Miami–Multifamily, which has had a good run in recent years, is expected to keep running a while longer, according to the results of the Akerman 2014 Industry Outlook, which was released this week by national law firm Akerman at its fifth annual Akerman U.S. real estate summit in Miami. The survey is an annual measure of economic conditions, investor confidence, and key market indicators in the commercial real estate sector, reflecting the perspectives of nearly 300 CEOs, COOs, and other top industry executives who attended the Akerman Summit in Miami on March 7.
Among other conclusions about the state of the multifamily business, the survey found that multifamily is expected to be the most active real estate sector this year, followed by industrial, retail, office and hospitality. Multifamily is also expected to be the dominant sector for foreign investment, with the majority of capital coming from Europe, followed by office, hospitality, retail and industrial.
Overall, a significant majority (70 percent) of real estate executives reported a more optimistic outlook about the market in 2014 than in 2013. Akerman Survey respondents foresee increases in capital availability from nearly all sources except government entities, which have remained at the bottom of the capital availability pool for two consecutive years. Private equity sources are predicted to drive U.S. commercial real estate financing in 2014.
Moreover, REITs are expected to continue to serve as a leading source of real estate debt and equity funding, while banks also are projected to boost funding in 2014. Confidence in the banking industry as a primary source of CRE financing has increased by 34 percent since 2011, and the CMBS market also is expected to play a more pronounced role in 2014. Less than 1 percent of industry executives expected to see a change in capital availability within the CMBS sector in 2011, but a third of executives now predict that CMBS issuance will be an active component in the capital stack for 2014.
Despite the increased optimism regarding the U.S. commercial real estate market, government shutdowns and future government spending continue to mute executive confidence levels. More than half of survey respondents (52 percent) cited government policies and Congressional gridlock as primary reasons for their lack of confidence. For three consecutive years, real estate executives have cited U.S. policies, availability of credit, and refinancing challenges as the most pressing issues facing the real estate industry.