The latest Economic Sentiment Index from Real Estate Roundtable shows a positive outlook for commercial real estate, particularly in the multifamily and industrial sectors.
Commercial real estate industry executives are feeling increasingly optimistic for the remainder of 2021. The Real Estate Roundtable (RER) Q1 2021 Economic Sentiment Index, released earlier this month, showed promise in multiple segments of the industry. However, the pandemic continues to weigh heavily on all sectors.
The overall index jumped in the first quarter to a score of 59, 15 points higher than the fourth quarter of 2020. The index is measured on a scale of 1-100, with any reading of 50 or better being positive results. The current conditions index improved 17 points to 44, and the future conditions index increased 13 points to 74, the highest reading since Q3 2010.
"Throughout the pandemic real estate owners, managers, investors and lenders each have focused on mitigating the impact of the crisis on their residential and business tenants," said Jeffrey D. DeBoer, Real Estate Roundtable President and CEO, in a release. "The industry has restructured leases with tenants under stress, advocated for federal rental and other assistance, helped educate tenants on how to access relief, provided significant reforms to health related building operational protocols, and issued detailed guidance to ensure safe and effective ways to re-enter buildings."
Multifamily housing was among the sectors cited as the most resilient during the pandemic, and “best positioned to emerge successful in a post-pandemic environment,” states the RER report, although it does state the outlook is “highly dependent on asset class and portfolio mix.”
As far as asset values, multifamily communities are trading slightly below their pre-pandemic values. “Some multifamily markets are holding up well but it’s very location-dependent,” says one respondent.
Access to capital was determined on a market-by-market basis, yet most multifamily respondents reported having access to high quality assets. “Equity investors are really interested in multifamily,” says one respondent.
The survey conducted by Ferguson Partners measures executive-level sentiment on current and future outlooks for three topics: Overall real estate conditions, access to capital markets and real estate asset values.
Michael Miller is the Managing Editor for NAA.