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Investors surveyed by PricewaterhouseCoopers (PwC) continue to see commercial real estate as a relative bright spot in the gloomy investment landscape. At the same time, stubbornly high unemployment and economic volatility has clearly dampened their enthusiasm for the asset class since the start of 2011, even as rents, values, absorption and occupancy levels have slowly improved.
Meanwhile, a different study of commercial property net operating income (NOI) by Fitch Ratings showed that the sector still has quite a ways to go before it completely shakes off the effects of the Great Recession. Overall NOI was still down by 1% from year-end 2009 to year-end 2010, but has shown an improvement from the prior year-of-year decline of 5%, and “one year of greater NOI stability does not mean a recovery,” Fitch Senior Director Adam Fox noted.
Responses from the more than 200 institutional investors surveyed by PwC during the third quarter reflected the volatility in the financial markets, the global sovereign debt crisis, the U.S. rating downgrade, and fears by some economists of a possible double-dip recession.
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