{"id":1004330546,"date":"2019-06-13T04:39:18","date_gmt":"2019-06-13T12:39:18","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004330546"},"modified":"2019-06-13T06:50:57","modified_gmt":"2019-06-13T14:50:57","slug":"akerman-2019-report-more-bull-than-bear","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/akerman-2019-report-more-bull-than-bear\/","title":{"rendered":"Bulls Outnumber Bears in CRE C-Suites"},"content":{"rendered":"
\"\"<\/a>

Alan Cohen, chair of real estate finance practice, New York, Akerman. Image courtesy of Akerman<\/em><\/p><\/div>\n

The latest annual report from national law firm Akerman<\/a>, based on a recent survey of more than 200 commercial real estate executives across the country, expresses an optimism that might be unexpected. Nearly three-quarters of those surveyed said that they are more optimistic about CRE this year than last.<\/p>\n

Asked \u201cWhich of the following best describes your outlook for the U.S. real estate market in 2019?\u201d, 39 percent answered \u201cMarginally more optimistic than 2018\u201d and an additional 33 percent responded \u201cSignificantly more optimistic than 2018.\u201d<\/p>\n

Of the respondents, 46 percent cite the continuing improvement of the U.S. economy as their primary reason for confidence in the real estate market. The report points to both the ongoing GDP growth\u2014<\/em>3.2 percent annualized in the first quarter\u2014<\/em>and steady job expansion through April.<\/p>\n

\"\"<\/a>

Larry Eiben, co-deputy chair of real estate practice group, Chicago, Akerman. Image courtesy of Akerman<\/em><\/p><\/div>\n

Optimism notwithstanding, the survey respondents do acknowledge what the report calls \u201cend-of-cycle behavior,\u201d such as a sharp decline in CRE deals in the first quarter. Numerous concerns enter into this, including trade wars, tariffs on core raw materials such as steel and lumber, a weakening global economy, and partisanship in the approach to the 2020 elections. Three big ones are subsumed under \u201cuncertainty\u201d: interest rates, global economic conditions and federal government policy.<\/p>\n

The slowdown, inevitable thought it might be, is widely seen as likely to be less severe than the Great Recession<\/a>, because of lower leverage, more modest levels of spec development and other factors. And of course, some players are getting ready.<\/p>\n

\u201cCRE is likely nearing the end of a very long and bullish cycle, and well-capitalized firms will have a competitive advantage when the market enters a corrective phase<\/em>,\u201d says Akerman\u2019s Alan Cohen. \u201cThere\u2019s a lot of dry powder waiting on the sidelines earmarked for commercial real estate that will be deployed for distressed opportunities<\/em>.\u201d<\/p>\n

\"\"<\/a>

Allison Nelson, co-deputy chair of real estate practice group, Denver, Akerman. Image courtesy of Akerman<\/em><\/p><\/div>\n

Cohen adds that \u201cmany funds and other non-institutional players have either been accumulating capital by making investments very selectively over the last few years (due to cap rate compressions) or raising new capital to prepare for distressed opportunities<\/em>.\u201d<\/p>\n

Slightly more than half of survey respondents think the primary funder of CRE in 2019 will be private equity, followed by banks. Nearly a fifth (19 percent) see Opportunity Zones<\/a> as a top funding vehicle this year.<\/p>\n

CRE curveballs<\/h2>\n

Some observations by Akerman\u2019s own people are worth noting. Technology has created buildings that merge the same type of amenities across various sectors, says Akerman\u2019s Allison Nelson. \u201cThe workplace is coming into residential communities, and the comforts of residential life are being transposed into the office and industrial space<\/em>.\u201d<\/p>\n

\"\"<\/a>

Richard Leland, partener, New York, Akerman. Image courtesy of Akerman<\/em><\/p><\/div>\n

\u201cOne class to be concerned about is the aging Class A buildings<\/em>,\u201d says Akerman\u2019s Larry Eiben. \u201dClass A office building landlords are having more trouble finding tenants because they are still seeking the higher rents to which they\u2019ve grown accustomed<\/em>.\u201d<\/p>\n

Many owners of these older buildings have renovated and added amenities to retain current tenants and attract new tenants, but if a building is significantly older for a particular market, \u201cit may be prime for redevelopment for other uses such as hospitality or even multifamily residential<\/em>,\u201d Eiben suggests.<\/p>\n

One reality in many regions is the need to consider sustainability and new site conditions created by climate change models. In New York, for example<\/a>, environmental concerns are \u201cBaked into many projects to deal with sustainability in anticipation of more frequent flooding and sea level changes<\/em>,\u201d says Akerman\u2019s Richard Leland.<\/p>\n

\"\"<\/a>

Eric Rapkin, chair of national real estate practice, Fort Lauderdale, Akerman. Image courtesy of Akerman<\/em><\/p><\/div>\n

Eric Rapkin, chair of Akerman\u2019s national real estate practice, cites growing disparities between high- and low-tax states. \u201cThe cost of living and income tax variables across the U.S. are already contributing to migrations in corporate headquarters and organizational campuses<\/em>,\u201d he notes. \u201cIt will be interesting to watch over the next few years as conditions continue to evolve and businesses continue relocating their headquarters in consideration of tax-rate disparities<\/em>.\u201d<\/p>\n

The report highlights some recent corporate headquarters relocations to Texas, such as those of Toyota\u2019s North American operation and McKesson Corp.<\/p>\n

Top real estate executives across the U.S. were interviewed by a third party on their perceptions of the health of the U.S. CRE market. In all, 210 interviews were completed between Feb. 19 and March 5.<\/p>\n","protected":false},"excerpt":{"rendered":"

Though it acknowledges a wide variety of obstacles and headwinds, Akerman’s annual survey indicates a perhaps surprising degree of optimism among executives.<\/p>\n","protected":false},"author":882,"featured_media":1004330657,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21825,21783,23891,21742],"tags":[35176,40604],"class_list":["post-1004330546","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-finance","category-investment","category-national","category-latest","tag-akerman-llp","tag-akerman-u-s-real-estate-industry-outlook"],"acf":[],"yoast_head":"\nBulls Outnumber Bears in CRE C-Suites - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/akerman-2019-report-more-bull-than-bear\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Bulls Outnumber Bears in CRE C-Suites\" \/>\n<meta property=\"og:description\" content=\"Though it acknowledges a wide variety of obstacles and headwinds, Akerman's annual survey indicates a perhaps surprising degree of optimism among executives.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/akerman-2019-report-more-bull-than-bear\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2019-06-13T12:39:18+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2019-06-13T14:50:57+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2019\/06\/BearBull_iStock_allanswart_672426462.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"620\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/akerman-2019-report-more-bull-than-bear\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/akerman-2019-report-more-bull-than-bear\/\",\"name\":\"Bulls Outnumber Bears in CRE C-Suites - 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