{"id":1004335121,"date":"2019-06-28T05:08:55","date_gmt":"2019-06-28T13:08:55","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004335121"},"modified":"2019-07-03T08:52:59","modified_gmt":"2019-07-03T16:52:59","slug":"report-points-to-increasing-office-sector-investments","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/report-points-to-increasing-office-sector-investments\/","title":{"rendered":"Upbeat Outlook for Office Investment: Report"},"content":{"rendered":"
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Tina Lichens, COO, Real Capital. Image courtesy of Real Capital Markets<\/em><\/p><\/div>\n

As we reach the halfway point in 2019, U.S. office property owners, investors and brokers say they expect investment activity to pick up and be consistent throughout the rest of the year and into 2020, according to a new Mid-Year Office Investor Sentiment Report<\/a> by Real Capital Markets.<\/p>\n

The investors, while still expressing some caution given the length of the cycle, cite the overall strength of the economy, job growth and population expansion in many markets, as signs for their optimism. They also point to an estimated $200 billion in dry power yet to be deployed in commercial real estate, leaving plenty of room for deals to be made. Nearly 40 percent of those surveyed said they expect investment activity to be consistent over the next six to 12 months. Twenty percent of respondents said they expect activity levels to increase nominally and 10 percent said activity levels will increase. Another 19 percent responded they expect only nominal decreases in investment activity and 12 percent said activity levels will decrease.<\/p>\n

More than half of survey participants, 53 percent, said they expect pricing levels for office investments to be consistent over the next 6 to 12 months. Just 3 percent said they expect price increases and 13 percent predict only nominal price increases. Twenty-eight percent said to watch for nominal pricing decreases and 3 percent expect pricing level decreases.<\/p>\n

Coworking concerns<\/strong><\/h2>\n

The report raised a possible red flag over the growth of coworking investments<\/a> with a majority of investors, 87 percent, calling coworking a moderate to high risk to investment values, and 37 percent of that total noting the market could be saturated. The report states office investors are looking more closely at the investment value of coworking space, because of its rapid expansion and potential exposure to market downturns.<\/p>\n

Despite their concerns about future risk, owners and investors still see coworking\u2014which accounted for nearly half of the U.S. office absorption in 2018 by some estimates\u2014offering opportunities for office properties. Some noted a good coworking partner offers stability and cash flow to an office building.<\/p>\n

\u201cIndustry experts are telling us that on many different levels, the coworking movement has been very good for the office market. As leasing and absorption have been strong for this sector, it has been accretive to value,\u201d<\/em> Tina Lichens, RCM COO, told Commercial Property Executive. \u201cOwners and investors are mindful, however, that too much of a good thing may not always be positive in the long term, so they\u2019re looking to strike the perfect balance in their buildings.\u201d <\/em><\/p>\n

Investors identified the top three ways coworking has impacted the market:<\/p>\n