INDUSTRY NEWS & NOTES
MAKING SLOW COMEBACK
Albeit very slowly, commercial real estate fundamentals are improving, and
investors say the industry is moving past the bottom of the cycle, according
to the PwC Real Estate Investor Survey, released by PricewaterhouseCoopers
LLC., in March. The report highlights anticipated movement in all commercial
real estate sectors.
The U.S. office market is headed toward recovery by the end of 2011 because
of a lack of supply and signs of decreasing vacancy, according to the report.
Office markets in Chicago, Las Vegas, Los Angeles and Tampa, however, are
expected to remain in recession through 2012.
Just over 76 percent of retail stock is expected to remain in recession through
2012 because of inconsistent consumer spending and fears regarding inflation,
according to the report. It projects a recovery by the end of 2013.
The U.S. multifamily sector is well ahead of the other sectors in terms of
recovery, and is actually more focused on expansion at this point. An expansion phase is predicted through 2014 in many or most markets.
SENIOR HOUSING MARKET
Senior housing is showing marginal improvement in occupancy rates and
increasing year-over-year rent growth, while experiencing slowed construction and less inventory hitting the marketplace, according to information from the National Investment Center for the Seniors Housing and Care
During the first quarter of 2011, the average occupancy rate rose 0.2 percent to 87.9 percent, and 0.6 percent from its cyclical bottom of 87.3 percent. For the fourth consecutive quarter, the occupancy rate has improved.
The pace of year-over-year rent growth for seniors housing accelerated
for the first time since the first quarter of 2007, improving 0.5 percent after
no growth occurred in the fourth quarter of 2010. Annual absorption of
2. 1 percent in the first quarter also reached its highest level since the first
quarter of 2007.
Annual inventory growth slowed to 1. 3 percent, down from 2.6 percent a
year prior. Construction activity has teetered between flat and slowed during the last couple of years. However, the number of units under construction during the first quarter was down 57 percent from its cyclical peak in
the first quarter of 2008.