Economy Watch: Roundtable Survey Offers Mixed Outlook

By D.C. Stribling

Jeffrey DeBoer, president and CEO of The Real Estate Roundtable

Commercial real estate executives are optimistic on the whole about the economy and the real estate market in 2018, but express some caution about 2019, according to the Real Estate Roundtable’s Q1 2018 Economic Sentiment Index. Released late last week, the index is based on a survey of 47 named executives and experts, as well as other anonymous participants. 

The Roundtable’s Q1 2018 Sentiment Index came in at 54, a one point increase from the last quarter of 2017. The Current Conditions Index, at 57, represented an increase of four points from the previous quarter. The Future Conditions Index, at 51, decreased by one point from 4Q 2017.

The Overall Index is scored on a scale of 1 to 100 by averaging Current and Future Indices, and as usual with an index of this kind, any score over 50 is positive. So while executives in the survey tended to be happy about things as they are now, they’re just barely optimistic (51) about the future course of events, especially in 2019.

In other highlights, the survey found that while respondents believe asset values in gateway cities are nearing a peak , the real estate community has demonstrated a degree of discipline that was absent in the previous cycle. Both debt and equity sources of capital are making rational, risk-weighted decisions. Also, asset values in secondary and tertiary markets continue to increase as investors chase yield.