Top real estate executives remain optimistic about the performance potential of the U.S. market, according to the findings of the 2016 Real Confidence survey.
Survey participants continue to believe in the security of the U.S. economy. Investors’ sentiment reflects the conventional wisdom that inflation is tame, interest rate increases might already have been figured into forecasts and the nation’s gross domestic product is poised to continue growing modestly.
Investors are less confident in the prospects for the jobs market than most economic forecasters, who expect employment to continue to grow at an accelerated rate in 2016. Job growth is being balanced by upward pressure on wages, which led respondents to forecast that wage increases will outpace inflation this year. The nation’s unemployment rate is approaching the full-employment mark and the job market is tilting slightly in favor of higher labor costs.
Many executives believe that good investment opportunities in real estate still exist this year. Demand for core investments in primary markets remains strong, supply is still catching up to demand in a few key sectors, and interest is trending upward in secondary markets, as some buyers who are priced out of the core markets seek alternatives. Respondents rated the state of the real estate industry as healthy.
Survey respondents showed relatively strong confidence that rents will continue to increase. They were also confident that occupancies will rise further in 2016.
A market with strong fundamentals, an economy with slow and steady growth and a steady pipeline of capital and development are giving investors hope, even as the economy settles into a lumbering recovery pace.
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