Real estate analysts are scaling back their expectations for most classes of property nationwide save single-family homes, as surveyed by the Urban Land Institute (ULI).
ULI conducted the survey between mid-August and September. Economists have cut their expectations for commercial real estate transactions by 20 percent from their collective forecast in March, but say growth will resume in 2013.
Key to that growth is the issuance of commercial mortgage-backed securities, a key source of financing albeit a market whose collapse precipitated the recession.
Analysts surveyed by ULI expect a 15 percent return for equity real estate investment trusts (REITs) this year, and 10 percent for the following two years. REIT’s enjoyed a 28 percent return on investment in both 2009 and 2010, ULI stated.
“What this survey suggests is that, in general, the U.S. economy is making progress inch by inch,” said Dean Schwanke, executive director of the ULI Center for Capital Markets and Real Estate, in a written statement. “Nothing indicates a quick turnaround, but the economy and the real estate industry are moving toward a notable improvement by 2014.”
The new survey anticipates cooling in the apartment sector, with returns expected to continue dropping from the high point of 18.2 percent reached in 2010.
By property type, returns expected in 2012 include:
- retail, 11.4 percent;
- apartments, at 11.1 percent;
- industrial, at 10.4 percent; and
- office, at 9.4 percent.
The survey did not break down expectations by regions or states.
ULI said the survey showed significantly more optimism about the single-family housing industry compared to six months earlier, suggesting a housing recovery is underway as consumers sense a tipping point and, drawn by low mortgage rates, return to the market.
