The Urban Land Center for Capital Markets and Real Estate has issued its semiannual ULI Real Estate Consensus Forecast, and the document provides important real estate predictions for investors in California and around the country. Overall, analysts believe the U.S. real estate market will remain strong for the next three years. However, there are some new concerns about global growth and stability.
To prepare its forecast, ULI polled 48 real estate economists about what investors should expect between now and 2017. Those surveyed felt that real estate capital markets are wide open. Debt and equity capital are abundant, and commercial real estate transaction volumes are predicted to average $503 billion over the next three years. According to the Moody's/RCA Index, commercial real estate prices are also expected to rise around 6.8 percent each year.
Meanwhile, experts say the hotel industry is booming and is predicted to enjoy 6 percent gains in average revenue per available room between 2015 and 2017. Commercial mortgage-backed security issuance will likely rise to $140 billion by 2017. This is above its 20-year average of $71 billion, but comfortably below its pre-global financial crisis high of $229 billion.
In the real estate sector, some economists are concerned that housing starts, retail occupancy rates and investment trust returns may fall below their established averages. Due to store closings, retail vacancy rates will likely stay above average, but vacancy rates for other property types are expected to stay below average.
California investors interested in the commercial real estate market may benefit by retaining an attorney. Legal counsel could provide guidance regarding purchasing and management agreements, zoning laws, contract negotiations and other critical matters.