Real Estate Executives Remain Bullish as Tax Reform Measures Take Shape, Akerman Reports
As the
Coming off a record-high outlook in the 2018 survey, when 68 percent of respondents expressed more optimism for the market in comparison to the prior year, a remarkable 70 percent this year say they are more bullish about 2019 market activity than 2018. Nearly half (46 percent) say the continued improvement of the
Yet, the survey also shows sentiments of softening with a market slowdown looming. A third of respondents (33 percent) say interest rate uncertainty is their primary concern, followed by uncertainty in global economic conditions (23 percent) and uncertainty of federal government policy in the
"While the
Additional trends identified in Akerman's 2019 survey include:
* Tax Reform and Opportunity Zones Generate Activity: With the commercial real estate sector a key beneficiary of the Tax Cuts and Jobs Act passed in
* Digital Transformation and Disruption: Executives responding to the survey view technological advances as having the most influence on real estate development, with 48 percent selecting it among the top three trends that will have a significant impact over the next three years. Incorporating the latest technology and design attributes has become critical across all sectors of the real estate market, including luring and retaining tenants in office buildings, attracting millennials to residential properties and facilitating the use of automation and robotics for the industrial sector.
* Aging Population Drives New Areas of Growth: The graying of America closely follows technology and tax reform as the trend expected to most impact real estate development, with 45 percent of respondents designating it among their top three choices. As seniors account for more of the population, new types of healthcare facilities are experiencing growth, including microhospitals, ambulatory surgery centers and other medical uses within traditional retail locations.
* Housing Still Dominates: Survey respondents continue to express confidence in multifamily with 67 percent placing it among the top two sectors they expect to be the most active for real estate transactions in 2019, followed by single-family residential (50 percent). These results echo last year's survey where 63 percent of respondents predicted the multifamily sector would be the first or second most active in 2018. Within multifamily, 2019 respondents rank apartment development as likely to be most active this year, followed by senior living facilities.
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* Private Equity and Banks Lead Among Funding Vehicles: For the fourth year in a row, real estate executives expect most funding to come from private equity funds and institutional lenders. In reflecting on the top three areas they expect to fund the most commercial real estate debt and/or equity in 2019, 53 percent chose private equity and 51 percent selected banks. Additional funding sources selected by respondents include foreign investors (45 percent), insurance companies (28 percent) and real estate investment trusts (24 percent).
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