Q3 2017 Sentiment Index — CRE Leaders Remain Confident and See Balanced Market Fundamentals for Q3 Despite Political Uncertainty

Overall Conditions Remain Stable Amidst the Lack of Regulatory Changes in Washington, DC          

 Roundtable Weekly Archive -  .pdf of entire Q3 2017 Sentiment Index report -

    August 22, 2017

Media Contacts: (202) 639-8400
 Scott Sherwood or Abigail Grenadier

(WASHINGTON D.C.) — Commercial real estate industry leaders that participated in The Real Estate Roundtable’s Q3 2017 Economic Sentiment Index remain confident and view market fundamentals as strong, although their optimism has waned for two straight quarters due to political uncertainty in Washington, D.C.    

 Jeff DeBoer head right x220

"In the face of geopolitical uncertainty, we continue to believe that the real estate industry will navigate headwinds and maintain a positive path forward,” said Roundtable President and CEO Jeffrey DeBoer."

(Download the Q3 2017 Sentiment Index report)

“In the face of geopolitical uncertainty, we continue to believe that the real estate industry will navigate headwinds and maintain a positive path forward,” said Roundtable President and CEO Jeffrey DeBoer. "As our Q3 Index shows, our industry leaders continue to conduct business, asset values are stable, equity capital is widely available, and debt funds have stepped in to fill the void for the lack of construction financing we have been experiencing over the past year," DeBoer added.

The Roundtable’s Q3 2017 Sentiment Index registered at 50 — two points down from the last quarter. [The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices; any score over 50 is viewed as positive.] This quarter’s Current Conditions Index of 51 decreased two points from the previous quarter. This quarter’s Future Conditions Index of 48, decreased by two points from the previous quarter, however, was the same in Q3 2016. 

The report’s Topline Findings include:

•Although most responders for the Q3 report remain confident and view market fundamentals as strong, their optimism has waned for two straight quarters in light of the lack of regulatory changes in Washington, DC. 

• While most responders feel market fundamentals are strong, they are experiencing hesitation around decision making on the part of their tenants/clients. This hesitation is due to uncertainty about market conditions and trepidation about the new administration in Washington DC.

• Most responders feel high quality assets in primary markets are at peak pricing. A few responders suggested asset prices may be beyond peak. Despite asset pricing being perceived as high, there are many bidders for the highest quality assets.

• Despite the perceived slowing of Chinese capital flowing into the US real estate market, most responders feel equity capital is widely available. In answer to the lack of construction financing, the debt funds have stepped in to fill the void..

Forty-three percent of survey participants report Q3 asset prices today are “somewhat higher” compared to this time last year, suggesting primary markets are at peak pricing due to aggressiveness in the debt market and vast amounts of available capital. However, with 55% of respondents said they expect values to be “about the same” one year from now, pricing may remain steady throughout the course of the next year.

DeBoer also noted that  “Despite the continued slow but steady course the real estate industry has been on, Washington policy makers must focus on bipartisan growth-oriented policies for the future. The Roundtable will continue to work with policy makers by sharing thoughtful, long-term views about policy initiatives that will continue to provide our industry and the U.S. economy with much-needed policy reform in Washington.” 

Data for the Q3 survey was gathered in April by Chicago-based FPL Associates on The Roundtable’s behalf.  Download the full Q3 2017 Sentiment Index report here.
 
The next Sentiment Survey covering Q4 2017 will be released in early November.

About The Real Estate Roundtable Sentiment Survey

The Real Estate Roundtable Sentiment Survey is the industry’s most comprehensive measure of leading real estate executives’ confidence in financial and real estate markets.  The survey, conducted by FPL Advisory Group, captures the perspectives of senior real estate executives, including CEOs, presidents, board members, and other executives from a broad set of industry sectors including owners and asset managers, financial services firms and operators.

About The Real Estate Roundtable
The Real Estate Roundtable brings together leaders of the nation’s publicly-held and privately owned real estate ownership, development, lending and management firms with the leaders of national real estate trade associations to jointly address key national policy issues relating to real estate and the overall economy. Collectively, Roundtable members' portfolios contain over 12 billion square feet of office, retail and industrial properties valued at more than $1 trillion; over 1.5 million apartment units; and in excess of 2.5 million hotel rooms.  Participating trade associations represent more than 1.5 million people involved in virtually every aspect of the real estate business.

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