Akerman: CRE Optimism Prevails

Steady optimism prevails among most top commercial real estate executives despite global disruption and a volatile investment market, reported Akerman LLP, Miami. 

The law firm’s annual U.S. Real Estate Sector Report found that 92 percent of executives reported little or no change in their optimism compared to last year. The 189 executives surveyed cited strong U.S. real estate fundamentals and their resistance to market volatility as reason for optimism. 

Akerman detected a “measured tone of cyclic expectancy” in the executives’ responses after six years of commercial real estate recovery. But executives anticipate positive CRE activity at least through the end of 2016, including greater investor appetite in smaller markets and increasing focus on longer-term investment opportunities, as long as the U.S. economy continues to show momentum. 

“Even with slow growth, the United States still has the best property system in the world and our commercial real estate holds the top spot across global capital markets,” said Vincent Signorello, president and chief executive officer with Florida East Coast Industries, Coral Gables, Fla.

Some executives said a potential CRE slowdown would represent a healthy market correction. “Any time you have extended growth periods, ultimately there needs to be a reset–a rebalance of supply and demand–and these moments in economic cycles are actually very strategic for us,” Swire Properties President Stephen Owens said.

External market forces are prompting investors to take a longer-term view of real estate opportunities, Akerman said. Many real estate executives–32 percent of those surveyed–said Cuba’s burgeoning real estate market presents the greatest longer-term opportunities for U.S. investment in Latin America after more than a half-century of Cold War opposition.

In addition, the geopolitical, economic and global financial market uncertainty resulting from Brexit may result in more European and British investors entering the U.S. commercial real estate market, particularly in gateway cities such as New York, Miami and Los Angeles. This would provide alternative funding solutions in the capital stack, Akerman said.