Bernstein & Feldman, P.A.

Providing Personal Counsel
And Representation For Over
30 Years

Recovery in sight for commercial real estate market

When Congress failed to find an alternative to sequestration, real estate professionals and investors took a deep breath and crossed fingers and toes that the mandatory spending cuts would not stall the steady growth of the commercial real estate market. The financial crunch would not hit the residential real estate market quite the same way and quite as quickly. In some ways it is as simple as this: When budgets are cut, businesses need less space for people and products.

During the first quarter, as the data rolled in, industry and economic analysts noted that the commercial real estate market was continuing its modest rebound from earlier quarters. According to the Urban Land Institute and Ernst & Young Real Estate Consensus Forecast, transaction volume was on track to increase every year until 2015. Year-over-year volume should go up by as much as 20 percent.

Numbers from the CCIM Institute's Quarterly Market Trends for first quarter 2013 confirmed that growth had not stalled. Results, however, varied by market, at times quite significantly.

Baltimore's recovery earned a C -- not the worst-performing market, but not the best either. Where Baltimore shone was in investor interest and annual volume growth during 2012. The 70 percent increase was illustrative of investors' tendency in times of moderate overall growth to focus on smaller cities.

CCIM reported, too, that the 30 largest markets in the country each saw more than $2 billion in transactions during 2012, bucking a four-year trend. In 2012, in fact, fourth quarter activity was better than it had been since 2007. Volume gains were matched by moderate price gains, too.

Real estate markets lag the general economy, though, so we won't know until the end of the year whether it's safe to un-cross those fingers.

Source: Financial Advisor Magazine, "High-Quality Commercial Real Estate Market On An Upward Trajectory, Offering Opportunity for Investors," Chuck Schreiber, June 6, 2013