Cautious Optimism Leading CRE into New Year

The findings from a recent CIT Group Inc. survey may make 2014 a little brighter for the CRE industry. That’s because middle-market commercial real estate executives are expressing cautious optimism toward the market and are looking to take advantage of long-term investment opportunities, which bodes well for CRE overall. However, the majority are finding that the current tax and regulatory climate is placing a strain on the performance of their companies.

“Commercial real estate has been known to be a bellwether for the overall U.S. economy,” said Matt Galligan, president of CIT Real Estate Finance. “As we enter 2014, we are seeing mixed views among middle market commercial real estate executives. The good news is we are definitely seeing renewed optimism and expectations for a more complete recovery down the road.”

Among the key findings in the report from CIT, a provider of financing and advisory services to small businesses and middle market companies, is that over half of industry executives believe that the U.S. commercial real estate market is in recovery, while one in 10 say the recovery is very strong. Naysayers, who make up just under a third, warn that certain segments of the industry are poised for significant decline.

While interest rates and ongoing unemployment top the list of factors that influence executives’ investment decisions, overall consumer confidence is at the bottom. The top five investment influences include: interest rates, unemployment rates, the Affordable Care Act, foreclosures, and consumer confidence. Copies of the full report can be downloaded at cit.com/realestateoutlook.

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