Survey: CRE Executives Bullish on Sector’s Recovery

The slow pace of the economic recovery has done little to temper optimism among executives in the commercial real estate (CRE) sector, according to ""DLA Piper's"":http://dlapiperresummit.com/index.html 2013 State of the Market Survey.

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Eighty-five percent of executives surveyed described themselves as having a ""bullish"" outlook, the survey shows. That's a massive turnaround from the 2011 survey (the most recent previous report), when only 30 percent of respondents characterized themselves as bullish.

The 2008 survey--taken at the start of the financial meltdown--had only one in ten executives showing a bullish attitude.

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With the economy still struggling and job growth only showing modest improvement, few executives said they expect to see a sustained, broad economic recovery that might lift real estate fundamentals.

Instead, many cited low-cost financing and easier access to capital as the source of their confidence. Fifty-six percent of those surveyed attribute their bullishness to a combination of the current low interest rate environment and abundant debt and equity capital supplies, while only 39.7 percent say the strengthening U.S. economy had made them more optimistic.

Among those who have a less positive take on the CRE sector, the majority--48.8 percent--cite slow job growth as the biggest source of concern. The next most common response was ""continued gridlock in Washington"" at 36.6 percent, followed by ""ongoing European debt crisis"" at 9.8 percent. Notably, only 4.9 percent cited sequestration and subsequent budget cuts as a worry.

Health care proved to be the most attractive industry sector for CRE executives in this year's survey, largely due to investment stability, superior performance, and ""long-term opportunity following the re-election of President Obama and the implementation of the Affordable Care Act,"" DLA Piper said.

The next asset class with the most popular draw was multifamily, followed by industrial, hotel, and office (downtown as opposed to suburban).