CRE Forecast: Values Will Rise in Coming Year

Commercial real estate experts expect the industry to improve in the second half of the year, according to a survey by the Urban Land Institute, which credited increasing corporate profits for the good news. The industry trade group and think tank surveyed developers, brokers, architects, and other real estate professionals who predicted increasing values for all types of commercial property.

Respondents expect warehouse distribution centers to jump significantly in value because U.S.-based manufacturing continues to show positive signs. The value of industrial properties is likewise forecast to rise, especially those in energy and high-tech markets such as Austin, Texas, and Silicon Valley, where job gains, demand from renters, and rising rents lead the country. Hotels are projected to have the biggest gain overall, according to the annual survey.

While Boston and San Francisco are expected to lead rising property values, other major cities aren’t faring well. Los Angeles values are predicted to generally remain flat. Interest in Washington, D.C., commercial property investment has declined. Survey respondents blame already high prices for the downward trend and predicted that federal cutbacks might reduce demand for office real estate in the country’s capital.