Florida's commercial professionals find reason for optimism
Monday, May 14, 2012
Florida’s commercial real estate market outlook improved in the first quarter of 2012, according to the University of Florida.
The Survey of Emerging Market Conditions, conducted quarterly by the Kelley A. Bergstrom Center for Real Estate Studies at UF’s Warrington College of Business Administration, revealed that those in the real estate business felt optimistic because of the falling unemployment rate and because they see more activity in rental housing, such as lease signings. The unemployment rate dropped from 9.9 percent in December 2011 to 9 percent in March.
"Positive outlooks for occupancy and rent growth along with an improving employment trend are increasing our respondents’ optimism about the real estate markets in Florida,” says Timothy S. Becker, director of the Bergstrom Center.
The UF Commercial Real Estate Sentiment Index, a measure of the respondents’ own business outlook, reached its highest level since 2007. Bergstrom Center officials attributed the rise to lenders and owners sensing a better lending environment with banks as well as an improving economy.
"With billions of dollars of loans coming due over the next year, the increased lending activity is a welcome sign for real estate owners and investors looking for debt capital to refinance quality properties,” Becker says.
Property fundamentals including occupancy and rental rates improved this quarter with progress in single-family and condominium development, apartments, industrial, land investment, and capital availability. Occupancy expectations were rated most favorably in the premium office market. Respondents cited a better employment outlook as the reason for optimism.
Although respondents were optimistic about the industry and the overall economy, they cited concerns about the upcoming presidential election and the state government’s financial situation.
Respondents said that significant policy changes would most likely not be in place before the November elections and not resolving those issues could lead to harsh economic results. Among those issues are the Bush tax cuts and the payroll tax break, which are both scheduled to expire after 2012, and $1.2 trillion in spending cuts that are set to take effect in 2013. Respondents also were concerned with artificially low interest rates, inflation and increased gas prices.
Overall, the survey revealed that the future for real estate in Florida looks positive, but political and economic uncertainties remain. A majority of respondents expect a slow and measured recovery until the conclusion of the presidential elections.
A total of 189 Florida professional real estate analysts and investors, representing 13 urban regions of the state and up to 15 property types, participated in the survey. The survey is done for participants in the commercial real estate market in Florida.