Marcus & Millichap (NYSE:MMI), a leading commercial real estate
investment services firm with offices throughout the United States and
Canada, reports that commercial real estate (CRE) investor confidence
set a new record high. The firm’s Investor Sentiment Survey Index is
calculated quarterly and rose from 179 to 187 in the fourth quarter of
2014, an eight point increase above the third quarter.
Marcus & Millichap reports 68 percent of responding CRE investors plan
to increase their holdings in the coming year by an average of 15
percent. An additional 26 percent expect investments to remain the same,
while 6 percent said that their real estate portfolio may decrease over
the next year.
Economic uncertainty across the international environment is causing the
United States to look even more favorable compared to other economies
around the world, translating into more capital flowing into the U.S.
Recently, the 10-year Treasury fell back to the 2.0 percent range
effectively reversing the increases that occurred in 2013. Continued
global economic uncertainty will likely restrain interest rates through
much of the year.
“Those factors bode extremely well for the commercial real estate
outlook because you see occupancies continuing to rise and rents
accelerating at a time when interest rates are now even more attractive
and financing is still readily available,” says Hessam Nadji, chief
strategy officer and director of specialty divisions at Marcus &
Millichap.
“We believe that what’s happened around the world, with different
central banks lowering rates, will give our Federal Reserve pause as far
as how aggressive they are going to be in raising our interest rates,”
says William E. Hughes, senior vice president of Marcus & Millichap
Capital Corp. “I think that the period of low interest rates has been
extended, which is very good for our economy, for housing, and for
commercial real estate.”
Amid declining interest rates, strong job growth and retail sales growth
in the U.S., a majority of CRE investors expect the value of properties
in their portfolios to increase over the next 12 months. Apartment
investors are particularly optimistic with 78 percent expecting values
to rise by an average of 5.3 percent in 2015. The industrial sector
shows 68 percent of investors surveyed anticipate that the value of
their properties will increase, with an average 4.4 percent improvement.
Among retail investors, 68 percent expect a 5.8 percent rise in value
over the next 12 months. The hotel sector reads nearly two-thirds or 63
percent of respondents anticipate that hotel values will increase by an
average of 5.0 percent.
“While there are still risks in a fragile global environment,” states
Nadji, “economic fundamentals in the U.S., from a perspective of
interest rates, availability of capital, and job growth, continue to
show a very healthy and improving picture for CRE demand in 2015 and
onward.”
For complete access to Marcus & Millichap’s complimentary Investor
Sentiment Survey First Quarter 2015 Outlook, please visit: http://bit.ly/1x8GiWI.
About Marcus & Millichap (NYSE: MMI)
With nearly 1,500 investment professionals located throughout the
United States and Canada, Marcus & Millichap is a leading specialist in
commercial real estate investment sales, financing, research and
advisory services. Founded in 1971, the firm closed over 7,600
transactions in 2014 with a value of approximately $33.1 billion. The
company has perfected a powerful system for marketing properties that
combines investment specialization, local market expertise, the
industry’s most comprehensive research, state-of-the-art technology, and
relationships with the largest pool of qualified investors. To learn
more, please visit: www.MarcusMillichap.com.
Copyright Business Wire 2015