Survey Respondents Say Sales Activity Will Increase Across All Property Types in 2011, But Their Expectations Are Tempered By Uncertainty About the Economy
Written by Randyl Drummer [October 13, 2010, News: National]
Investors have tamped down their expectations for over-sized returns in 2011, adopting a back-to-basics approach as debt markets continue to thaw and value-add and distressed sales opportunities gradually build momentum next year, according to respondents to one of the industry’s most widely watched surveys.
Real estate executives surveyed for Emerging Trends in Real Estate 2011, a joint report by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC), expected 2011 returns to be in the high single digits, 7.5% unlevered for institutional-quality private real estate and 8.2% for REITs. Most of those increases will be driven by modest gains in property-level income and appreciation, with larger returns for trophy properties in prime markets. But the effects of three long years of pain won’t disappear overnight.
“After a 30% to 40% loss, it could take a long time to make up ground,” commented one respondent. Gradually, extreme negativity in commercial real estate will subside — though not before lenders and borrowers finally start to accelerate their loan workouts and accept loss haircuts of up to 50% on the inflated values of assets buyers purchased during the commercial real estate price bubble that preceded the recession, according to the report. ULI and PwC interviewed or surveyed more than 875 professionals representing a broad range of industry experts, including investors, fund managers, developers, REITs, lenders, brokers, advisers and consultants. Many have become more realistic about their predicament over the last 12 months, seeking shelter in real estate’s value relative to other asset classes.
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Chris Shaheen is a graduate of Louisiana State University where he obtained a Bachelor of Science in Business Management. Shaheen obtained the Louisiana Real Estate Sales License in 1995 where he began work as a consultant with Saurage Company Inc. and remains today as a specialist in development, land valuation, and financing with Saurage Rotenberg Commercial Real Estate.
Saurage Rotenberg Commercial Real Estate is a member of the Baton Rouge Area Chamber of Commerce (BRAC); the West Baton Rouge Chamber of Commerce; the Baton Rouge Growth Coalition; the Baton Rouge Better Business Bureau; the Louisiana Commercial Data Base (LACDB); and the International Council of Shopping Centers (ICSC). Several agents, on an individual basis, are members of the Society of Industrial and Office Realtors® (SIOR), the Certified Commercial Investment Member Institute (CCIM); the National Association of REALTORS® (NAR); and the Greater Baton Rouge Association of REALTORS® Commercial Investment Division (CID).