Gridlock Aside, Executives Offer Even-Handed View of Government: CPE 100 Quarterly Sentiment Survey
- Jan 28, 2013
Washington’s penchant for gridlock and partisan bickering has soured much of the country on the federal government, yet commercial real estate executives seem to be taking a more balanced view of their day-to-day encounters with the public sector at all levels. As the CPE Quarterly Sentiment Survey shows, industry leaders are maintaining their skepticism while stopping well short of writing off the government completely. Those findings are among the highlights of the most recent quarterly poll of the CPE 100, a national group of real estate leaders representing a broad spectrum of business areas.
Perhaps the most telling result emerged in the way executives view their dealings with federal, state and local agencies. Only 17 percent of respondents reported a decline in the quality of those interactions over the past five years. That was exceeded by the 25 percent of executives who said that those interactions had gotten better during the same period. But by far the biggest group—58 percent—agreed that their dealings with the public sector were about the same as they were five years ago.
“The fact that attitudes towards the government have largely stayed the same is an achievement, especially considering the level of competence coming out of Washington over the last two years,” said CPE senior associate editor Mike Ratliff, who coordinates the CPE 100 Quarterly Sentiment Survey. “Hopefully, this foreshadows a renewed bipartisan effort to start getting our country’s financials in order and bring some certainty back to the business environment.”
Perceptions of the government’s role reflect a similarly even-handed take. Asked whether they consider government at all levels to be primarily partner or adversary, only about 16 percent of respondents characterized public agencies in such absolute terms. The vast majority—75 percent—agreed that whether the government acts as ally or obstacle depends on the circumstances.
CPE 100 members also identified several areas of government functions that offer room for improvement. Greater efficiency, responsiveness and streamlined approvals top the wish list of 50 percent of respondents. Another third said that simpler regulations, or fewer of them, would do the most to improve their interactions with the public sector.
“Real estate executives have long worked closely with government on public-private development projects; as such projects ramp up, it makes sense that the ability to work together would improve,” said CPE Editorial Director Suzann Silverman. “However, since 50 percent of respondents said they would like to see greater efficiency and responsiveness in the approval process, it seems the process needs further fine-tuning.
“At the federal legislative level, there have been some successes for the real estate industry, but a number of issues remain in limbo and recent economic decisions have not been in line with what our various polls have indicated the industry would like to see,” Silverman added. “Our poll revealed a good amount of optimism, but since real estate performance lags the broader economy, it may take a while for that to trickle down to the industry level.”
In its quarterly snapshot of the commercial real estate sector and the economy at large, the Sentiment Survey found attitudes to be either stable or slightly improved. General economic conditions drew the most upbeat response. Sixty-seven percent of survey participants told CPE that they expect the general business climate to be better three months from now. That level of optimism is similar to the first quarter of 2012, when 63 percent of respondents gave economic conditions a thumbs-up.
“Though it wavers by a tenth of a percent, the unemployment rate continues to decrease, and the Dow Jones Industrial Average is almost back to its 2007 peak. The sovereign-debt crisis in Europe is being met with more optimism in 2013, so things are starting to look up,” Ratliff added. “I think that these trends have introduced some confidence in the economy, and that is what our respondents are telling us.”
When it comes to the commercial real estate industry in particular, the outlook remains stable, if slightly more guarded than for the broader economy. Asked to speculate about the industry’s near-term prospects, the CPE 100 split down the middle. Half agreed that the commercial real estate market will be “somewhat healthier,” while half believe that the market will stay largely unchanged. Those findings are similar to those in the third quarter, but also suggest a gradual upward trend. At mid-year, only 23 percent of respondents said they were counting on improvement during the next three months.
After fluctuation throughout 2012, expectations for company performance leveled out during the fourth quarter. Asked how their own firms will be faring in three months, participants split their answers 50-50 between “somewhat better” and “unchanged.” As recently as the second quarter of 2012, 39 percent of executives predicted better performance, 15 percent feared a decline, while most respondents—46 percent—expected the status quo. During the third quarter, nearly 60 percent forecast an improved showing by their companies, while 42 percent saw no change