Commercial real estate may provide refuge for educated investors looking for shelter amid economic instability, according to Expectations & Market Realities in Real Estate 2012: New Foundations in an Uncertain World, a report published jointly by Real Estate Research Corp., Deloitte, and the National Association of Realtors. Capital continues to flow in search of commercial real estate investment opportunities, and it’s not expected to subside anytime soon.
“The longer the economy and investment environment remain uncertain, the more attractive and logical commercial real estate looks as an investment and the more nicely it fits into a mixed-asset portfolio,” says Kenneth P. Riggs Jr., CCIM, CRE, MAI, chairman and president of Real Estate Research Corp. “Commercial real estate does not have the major swings that we have been seeing in the stock market. It is a tangible asset in this world of surprises, it has the needed income component, and still provides for upside once this world gets its act together.”
This translates into greater stability than many investment alternatives, Riggs explains. A solid, tangible foundation is what investors will be looking for, at least for the next 10 years, he adds.
“There is life out there, despite the uncertainty,” says Lawrence Yun, chief economist at NAR. “Commercial real estate was not overbuilt when we entered the recession, and absorption is positive for most sectors. We expect commercial real estate fundamentals to continue to improve with additional demand for space, assuming the economy continues to create jobs.”