Newspaper article THE JOURNAL RECORD

Commercial Real Estate Faces Long Grind to Recovery

Newspaper article THE JOURNAL RECORD

Commercial Real Estate Faces Long Grind to Recovery

Article excerpt

PricewaterhouseCoopers and the Urban Land Institute are telling the commercial real estate industry that it must be prepared for a slow, grind-it-out economic recovery following a period of mostly sporadic growth in only a few of the primary markets. In their Emerging Trends in Real Estate 2012 report, PwC and the Urban Land Institute said the enduring economic doldrums, coupled with the lack of dynamic job generators, are weighing heavily on the industry. The report noted that the reality is that businesses have learned they can increase profits with less space - while people can't afford bigger living spaces. While the nation's lackluster employment outlook delays filling office space, the related drag in consumer spending compromises growth in retail and industrial occupancies and rents.

Mitch Roschelle, partner, U.S. real estate advisory practice leader for PwC, said the following about the report:"Job creation is clearly the critical ingredient for a sustained recovery in commercial real estate and the market participants we surveyed uniformly struggled to identify new employment engines. As a result, businesses are focused on squeezing profitability out of productivity gains, and families forced into belt-tightening are using less square footage, which follows 'The Era of Less' sentiment we forecast last year. In 2012, investors expect pricing to level off in the top markets - and overall 'buy' sentiment will subside, selling appetites will increase, and more owners will hold until the economy untracks. This is part of 'the new normal' as investors are coming to grips that they may not be selling for more than they paid."Survey participants responded in the report predicting that 2012 will see an increased supply of properties for sale; however, due to economic uncertainty, interest among buyers may diminish. …

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