Commercial Real Estate Execs More Confident, Although "Headwinds" Remain

Survey Participants Cite Policy Risks Including Expiration of U.S. Terrorism Insurance Program, Slow-Growth Tax Reform, Conditions for Monetary Policy Tightening

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The Real Estate Roundtable

Feb 20, 2014, 12:35 ET

WASHINGTON, Feb. 20, 2014 /PRNewswire-USNewswire/ -- U.S. commercial real estate markets continue their gradual recovery from recession — as reflected by improving fundamentals, transaction volumes and capital flows (especially in non-"gateway" markets) — and will likely remain on a modestly upward trajectory over the coming year, according to The Real Estate Roundtable's latest quarterly Sentiment Survey, released today.

Yet, the Q1 survey shows a lingering wariness among senior industry executives about prospects for a sustainable economic recovery. Thus, despite a brightening economic outlook and recent bipartisan cooperation on the federal budget and debt ceiling, various policy risks continue to weigh on real estate markets. These include the scheduled sunset of the Terrorism Risk Insurance Act (TRIA) on Dec. 31, which could spark a job-killing commercial real estate credit crunch; tax reforms that could cause major dislocation in real estate markets; and the economic conditions surrounding future interest rate hikes, which could put renewed pressure on valuations, complicate loan refinancing, and impede debt servicing.

"The slight uptick in our latest Sentiment Index shows our industry on a generally positive path — in keeping with broader macroeconomic trends — yet still not fully recovered, and still subject to policy-related risks," said Roundtable Chairman Robert S. Taubman, who is chairman, president and CEO of Michigan-based Taubman Centers Inc. "U.S. policymakers must work to create a more attractive climate for job creation and investment as these are critical to real estate's health — and as real estate goes, so goes the economy," added Taubman, whose firm owns an international portfolio of regional and super regional malls.

Roundtable President and CEO Jeffrey DeBoer added, "As today's survey shows, our industry generally has stabilized, and is poised to lead the economy forward once again — in the areas of job growth, GDP, tax revenue, and retiree investments held by U.S. pension funds. But for these contributions to materialize, Washington needs to foster appropriate risk-taking and entrepreneurial activity; provide more clarity on key policies; protect U.S. economic and homeland security; and enact positive, pro-growth reforms in the tax, immigration and energy policy spheres."

For the full survey report and The Roundtable's 2014 Policy Agenda (Together: Real Estate, Jobs, Economic Growth), visit us online at www.rer.org. The Sentiment Survey is conducted by Chicago-based FPL Advisory Group on behalf of The Real Estate Roundtable.

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SOURCE The Real Estate Roundtable