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Demand for CRE Expected to Outpace Supply

Sponsor of commercial real estate alternative investment programs, United Realty, has teamed up with Zogby Analytics to create the United Realty/Zogby Real Estate Confidence Index (RECI). The index is a quarterly survey based on responses of elite and institutional real estate investors to 37 survey questions. As the second survey in the series, the results include opinions on several factors affecting the CRE markets.

RECI aims to provide advisors and investors an inside feel for the “pulse” of leaders in the industry as it relates to the current investment landscape, thoughts on future opportunities and risks, planned allocation adjustments, and financing outlooks.

Similar to last quarter’s results, the industry remains optimistic about the future of the industry this quarter. According to the Q2 2014 results of RECI, demand for commercial real estate (CRE) is expected to surpass supply. The majority of respondents also believe that foreign investment activity will increase significantly over the next year. Industrial, Medical and Multifamily sectors are viewed as the most favorable sectors today and for the next twelve months. In addition, value-added and opportunistic assets are seen as most attractive.

Despite the majority opinion that interest rates will rise over the next 12 months, second quarter results indicate favorable views, with 94% of respondents regarding the CRE market as attractive and almost half seeing it as very attractive. If survey respondents are correct in their prediction, capitalization rates could rise up to 150 basis points.

In a letter to subscribers, Jacob Frydman, Chairman and CEO of United Realty Group of Companies explained, “At United Realty, our mission is to not only sponsor and manage best-in-class investment programs, but also to empower investment decision-makers by developing and distributing blue chip research regarding the commercial real estate industry.”

The index hopes to help advisors and investors make better informed decisions for current property holdings and future decisions.

To view the survey results, click here.