Executives’ Investment Outlook Spreads the Wealth: CPE 100 Quarterly Sentiment Survey

Amid a rising note of optimism, commercial real estate executives expect a variety of property types to shine over the next 12 months, according to the CPE 100 Quarterly Sentiment Survey.

Asked which category is likely to present the most attractive investment opportunities, executives divided their responses fairly evenly among different sectors. One third called the office sector the most promising, and about 25 percent each said that the retail and multifamily sectors would provide  the strongest investment potential over the next 12 months.

The findings are among the highlights of the most recent quarterly poll of the CPE 100, a national group of invited real estate industry leaders representing a broad spectrum of business areas.

Somewhat different results emerged when executives named the property category that they expect to show the most appreciation in value. The multi-family sector—an investor and developer favorite throughout the recovery—was the top choice of 33 percent. Another 17 percent viewed office as providing the best appreciation in value over the next 12 months, and a similar percentage cited hotel properties.

 “Both rents and apartment property values continued to rise throughout the second quarter in most major metro areas across the country,” noted CPE associate editor Mike Ratliff, who coordinates the CPE 100 Quarterly Sentiment Survey. “While the single family housing market has strengthened a bit over the past year, concerns over the health of the economy and the sheer number of young people looking to live in urban centers should make core multi-family assets an attractive investment for quite some time. ” 

When it comes to the potential for declining cap rates, the hotel sector has the inside track, according to CPE 100 members. Forty-two percent named the category as the most likely to produce lower cap rates over the next 12 months.  The office sector was the runner-up.

These assessments coincided with a more upbeat view of business prospects. Half of CPE 100 survey respondents said that they expect the real estate market to be better three months from now. As recently as June, only 20 percent were willing to predict an improved three-month outlook. Along those lines, 58 percent of executives surveyed predict that their own companies will be performing better in three months.