New Urban Land Institute Survey04.04.2012 ULI Real Estate Consensus Forecast, Projects Improvements for the Real Estate Industry Through 2014 Survey is Based on Opinions from 38 of the Nation’s Leading Real Estate Economists and Analysts WASHINGTON (March 28, 2012) -- A new Urban Land Institute survey of 38 leading real estate economists and analysts from across the United States projects broad improvements for the nation’s economy, real estate capital markets, real estate fundamentals and the housing industry through 2014. The findings, released today, mark the start of a semi-annual survey of economists, the ULI Real Estate Consensus Forecast, being conducted by the ULI Center for Capital Markets and Real Estate. The survey results show reason for optimism throughout much of the real estate industry. Over the next three years:
The survey, conducted during late February and early March, is a consensus view and reflects the median forecast for 26 economic indicators, including property transaction volumes and issuance of commercial mortgage-backed securities; property investment returns, vacancy rates and rents for several property sectors; and housing starts and home prices. Comparisons are made on a year-by-year basis from 2009, when the nation was in the throes of recession, through 2014. While the ULI Real Estate Consensus Forecast suggests that economic growth will be steady rather than sporadic, it must be viewed within the context of numerous risk factors such as the continuing impact of Europe’s debt crisis; the impact of the upcoming presidential election in the U.S. and major elections overseas; and the complexities of tighter financial regulations in the U.S. and abroad, said ULI Chief Executive Officer Patrick L. Phillips. “While geopolitical and global economic events could change the forecast going forward, what we see in this survey is confidence that the U.S. real estate economy has weathered the brunt of the recent financial storm and is poised for significant improvement over the next three years. These results hold much promise for the real estate industry.” The survey results suggest a marked increase in commercial real estate activity, with total transaction volume expected to rise from $250 billion in 2012 to $312 billion in 2014. CBMS issuance, a key source of financing for commercial real estate, is expected to jump from $40 billion in 2012 to $75 billion in 2014 (a considerable increase from the recession’s low point of $3 billion in 2009). Total returns for equity REITs are expected to be 10 percent in 2012, 9 percent in 2013 and 8.5 percent in 2014, a sharp decrease from the surging REIT returns of 28 percent in both 2009 and 2010, but settling closer to the more sustainable level seen in 2011.Total returns for institutional-quality real estate assets, as measured by the National Council of Real Estate Investment Fiduciaries Property Index, have also been strong over the past two years and these returns are expected to remain healthy, providing returns of 11% in 2012, 9.5% in 2013, and 8.5% in 2014. “Commercial real estate returns for institutional quality and REIT assets have performed very well in recent years, and this performance is expected to remain strong but trend lower over the next three years,” said Dean Schwanke, executive director of the ULI Center for Capital Markets and Real Estate. A slight cooling trend in the apartment sector – the investors’ darling for the past two years – is seen in the survey results, with other property types projected to gain momentum over the next two years. By property type, total returns for institutional quality assets in 2012 are expected to be strongest for apartments, at 12.1 percent; followed by industrial, at 11.5 percent; office, at 10.8 percent; and retail, at 10 percent. By 2014, however, returns are expected to be strongest for office, at 10 percent, and industrial, at 10 percent; followed by apartments at 8.8 percent and retail at 8.5 percent.
The next ULI Real Estate Consensus Forecast is scheduled for release in September 2012. To download a copy of the ULI Real Estate Consensus Forecast webinar slides, CLICK HERE. Listen to the archived webinar.
NOTE TO REPORTERS AND EDITORS: The survey results were discussed today during a ULI webinar featuring three ULI leaders who participated in the survey: Peter Linneman, Ph.D, principal, Linneman Associates and chief executive officer, American Land Fund, Philadelphia; David Lynn, Ph.D, managing director, Clarion Partners, New York City; and Kenneth Rosen, Ph.D., chairman, Rosen Consulting Group, Berkeley, Calif. To request an interview with the webinar participants, contact Robert Krueger, ULI communications manager, at 202-624-7051; %3Ea%2F%3Cgro4000psilu1000psrege5000psK4000pstreboR%3E%22%20%3Benon%203000psnoitaroced-txet%20%3B%2922%20%2C25%20%2C351%28bgr%203000psroloc%22%3Delyts%20%22gro4000psilu1000psrege5000psK4000pstreboR3000psot2000ps%22%3Dferh%20a%3C. The webinar will be archived at www.uli.org. About the Urban Land Institute The Urban Land Institute (www.uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in sustaining and creating thriving communities worldwide. Established in 1936, the Institute has nearly 30,000 members representing all aspects of land use and development disciplines. About the ULI Center for Capital Markets and Real Estate The ULI Center for Capital Markets and Real Estate (www.uli.org/capitalmarkets) focuses on real estate finance, real estate industry and investment trends, and the relationship between the capital markets and real estate. The Center is engaged in a variety of projects including the annual Emerging Trends in Real Estate® reports, the monthly ULI Real Estate Business Barometer, the annual ULI Real Estate Capital Markets Conference, and numerous other programs. |