US Commercial Real Estate Recovery Possible in Late 2013

Posted on 2 December, 2012 by Jodee Redmond

Economic uncertainty continues to have an impact on US corporate decision-making and, consequently, on the commercial real estate market. This is likely to remain the case until the latter part of 2013, according to a report released by Jones Lang LaSalle.

Economic uncertainty hampers decision making

The National Commercial Real Estate Outlook prepared by the firm’s research group forecasts that the worst effects of the much discussed fiscal cliff will be avoided, which is good news for the U.S. On the other hand it also points out that the Euro crisis may continue to worsen before it starts to get better, and this will have a negative effect on global confidence and the United States economy into the New Year.

Now that the election is over, businesses are waiting to see how the fiscal cliff issue is resolved before making major decisions. The President and Congress must now negotiate a settlement to deal with a number of tax cuts set to expire at the end of 2012 and federal spending cuts set to begin at the start of 2013. Most aspects of the Consumer Protection Act and the Dodd-Frank Wall Street Reform will be implemented starting next year.

It will take some time for any government policy to translate into business activity. The good news for commercial property investors and the economy in general is that a new recession is unlikely.

Highlights from the report include the following:

  • Demand for large distribution centers (500,000 square feet and up) is increasing to meet demand from e-commerce and m-commerce companies.
  • Shopping malls offering entertainment venues and restaurants to give visitors an experience beyond simply making a purchase will fare better than ones offering basic services.
  • Hotel revenues will increase 4-6 percent per room in 2013. Lending for hotels will also increase.



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