The Trump administration has boosted confidence in the nation’s commercial real estate sector, according to an Akerman survey.
Over half of the 200 investors and lenders surveyed by the Miami-based law firm said they feel optimistic about the future of commercial real estate in 2017 compared with only 38 percent last year. President Donald Trump’s promises on deregulation, tax reductions and stronger economic growth supported the positive sentiment, with 64 percent of real estate executives saying his political agenda will have a rosy impact on the industry.
The survey released Wednesday did however reflect a pinch of anxiety: Over a quarter of respondents said economic uncertainty is a major factor affecting real estate. About 24 percent named federal gridlock and the uncertainty of government policy as key issues going forward, and 14 percent pointed to worries about rising interest rates.
“There are headwinds, but as we move into a deregulated environment, we expect less restrained capital to pursue opportunities actively and aggressively,” said Richard Bezold, chair of Akerman’s real estate practice group in Miami. “Local market knowledge and innovative investment strategies will continue to be the key differentiator for successful real estate investors.”
Real estate leaders expect this to be an active year for homebuilders. For the first time since 2010, respondents expect single-family home development to outpace multifamily construction.
While the national homeownership rate has dropped to a 50-year low, market observers say a larger share of residents are choosing to rent single-family homes rather than buy them.
Data shows one in every four homes in the U.S. are non-owner occupied, which points to a growing single-family rental market.
Development in the multifamily sector, including senior living, condominium and apartment products, will be the second-most active sector, 37 percent of respondents said. Nearly half said apartment development would be the most active sector, followed by senior housing.
Respondents pointed to a possible oversupply in the multifamily sector, especially in cities like New York, Los Angeles, Houston and Miami. Rents for downtown Miami condos declined 3.2 percent in the third quarter of 2016, and new rental units are projected to almost double the city’s existing supply.
Investors and lenders anticipate more housing development in suburban markets, noting a shift away from the urban-centric focus that marked the latest real estate boom, especially in South Florida.
The live-work-play phenomenon is here to stay, but investors will focus on bringing the “urban experience” to smaller, suburban communities with access to public transit. Mixed-use developments like Codina Partners’ Downtown Doral in suburban Miami-Dade County and the master-planned Metropica project in Sunrise come to mind.
Respondents predicted good news for commercial banks. They expect traditional lenders to drive real estate financing this year as Trump pushes to unwind Dodd-Frank regulations. Commercial banks were previously ranked as the weakest source for debt capital compared with other lending institutions.
But for 2017, banks took the No. 1 spot. Foreign investors and private equity ranked second and third, respectively, in the report, followed by real estate investment trusts, insurance companies and pension funds.
Akerman surveyed 200 clients and other top real estate executives across the U.S. for its eighth annual real estate report. The law firm conducted one-on-one interviews during the fourth quarter of 2016 before and after the presidential election.
Source: DBR
Larry W. Genet is a Senior Vice President in the CBRE, Inc. Miami, FL office. As part of the CBRE platform Mr. Genet can provide a wide range of services from local to Fortune 1000 clients including agency and tenant representation, asset or portfolio management, high level logistics, labor and data analytics prior to site selection, project/construction management, capital markets, owner user sales and valuation advisory services. CBRE is the global leader for real estate services worldwide.
Larry has extensive experience in landlord agency, tenant representation, acquisitions, dispositions and property management. As a third-generation commercial real estate professional and South Florida native, Larry boasts deep community ties, an intimate knowledge of the South Florida market and numerous professional contacts. Larry’s leasing expertise of industrial, office, land, retail and medical properties coupled with his experience in acquisitions and dispositions gives him the ability to represent a myriad of clients in the South Florida market. Additionally, Larry controls a portfolio of 13.5 million square feet allowing him to see every deal in the market. This ensures his clients never miss an opportunity. His knowledge of tenants and buyers in the market is top notch and when coupled with his team's vast portfolio, it's a winning combination.
