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Expectations and market realities in real estate 2015
Scaling new heights
As 2015 gets underway, many investors are more optimistic than they have been in years. Economic growth has been increasing, job growth has been improving, and consumers have been given a boost as gasoline prices have dipped nationwide. Compared to the markets and financial systems in other developed countries, the US economy looks generally healthy.
With respect to commercial real estate investment, interest rates are still low and fundamentals continue to improve. Volume and pricing have been increasing, especially for high-quality properties in the coastal markets, but we have also seen high values and prices in more secondary and tertiary markets. Returns in the form of both income and appreciation are expected to remain quite attractive in 2015 compared with many investment alternatives.
We—the National Association of REALTORS® (NAR), Deloitte, RERC LLC, and Situs (RERC’s parent company), which is noted hereafter as Situs RERC—expect these trends to continue. In fact, we expect commercial real estate prices and values to possibly increase even more during 2015, given the relative expected returns, the general transparency of commercial real estate in that it is relatively easy to understand, and the perceived safety of this asset class compared with many investment alternatives. As such, this issue of Expectations & Market Realities in Real Estate has been entitled “Scaling New Heights.”