Economy Watch: CRE Execs a Little More Glum

A new survey by M&T Bank shows commercial real estate industry leaders are somewhat more pessimistic now than they were a year ago.

Commercial real estate executives are somewhat more pessimistic now than they were a year ago, according to the results of a new survey by M&T Bank, which is based in Buffalo. For instance, only 19 percent of the CRE respondents said that the U.S. economy has improved over the last six months, compared with 59 percent who said that in early 2015; and 17 percent said that the economy has decelerated, up from 5 percent a year earlier.

Looking ahead, 24 percent of the surveyed CRE executives expect the national economy to improve in the next six months, down from 69 percent a year earlier. Some of the respondents expressed concern over the uncertain path of fiscal and monetary policy as one reason for the growing sense of unease.

Furthermore, expectations for CRE industry performance were down as well, with 23 percent of the respondents expecting things to get better this year. Sixty-one percent of respondents said that a year ago. However, 42 percent also expected rental rates to rise—something of a silver lining. But 54 percent said that a year ago. Ten percent expect rents to fall.

The survey was done by M&T, a regional bank, in January and February of this year among senior managers and owners of mid-sized businesses as well as commercial real estate investors or lessors. In this case, 72 CRE responses were received from throughout the bank’s geographic footprint, which is largely the mid-Atlantic states.