REAL ESTATE REPORT - REDI-net.com

WINTER 2011 | VOL 39 | NO 4
SUMMARY
As the economy continues to take a few steps forward and few
steps back in its struggle to stabilize, commercial real estate is defying
investor expectations. As a result, RERC anticipates:
n Economic growth to continue at a moderate pace, and unemployment
to remain high during 2011.
n The administration and Federal Reserve to do all they can to
encourage economic growth and keep interest rates low “for
an extended period,” including extending tax cuts, reducing
payroll taxes, or buying more treasuries.
n Despite increasing commodity prices, inflation should remain
low for the near term.
n The housing market will remain depressed and home prices
may decline further as foreclosures continue in 2011.
n For the first time since the recession began, RERC survey
respondents rated the availability of capital higher than
discipline.
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n Lending will expand and more capital, including CMBS, will be
available for investing in commercial real estate.
n Interest rates will remain low for the foreseeable future.
n Surging corporate profits and solid balance sheets will
allow businesses to boost investment and hiring(if demand
increases).
n Expect more banking, business, and real estate mergers and
acquisitions to occur in 2011.
n Many characteristics of a trifurcated market will remain in 2011,
as the division between top properties, distressed properties,
and “the rest” continues (although there has been progress in
moving distressed properties).
n Required going-in capitalization rates further compressed
during fourth quarter 2010, but are expected to begin to stabilize
in 2011.
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