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United States Real Estate Report Q4 2011
Business Monitor International, Sep 2011, Pages: 57
Business Monitor International's United States Real Estate Report provides industry professionals and strategists, corporate analysts, real estate associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on United States's Real Estate industry.
The US has seen key developments in Q3 with its downgrade by S&P for US debt and the lifting of the debt ceiling by the US government. These moves combined with a downward revision in US GDP growth and a weak retail sector increased uncertainty in the outlook for the US economy. The sharp fall in the US stock market has also added to the uncertainty. This change in perception for the economic outlook may result in a temporary pause in the recovery in the property sector in the US.
Some of the KEY OPPORTUNITIES in the real estate market are:
- The US commercial property market sector had been showing signs of reaching the bottom of the cycle but a slow recovery is likely to emerge. Key to this remains a reasonable outlook for employment growth. Improved business confidence is also vital to a sustained recovery in the sector. However, from BMI's interviews, the recovery is clearly emerging in the sector with rental growth occurring across many major cities.
- The retail sector in the US has been showing signs of recovery too. Iin the retail sector, retailers have had a better handle on distribution and merchandising strategies in the past 12 months, which has been reflected in improved earnings results for a majority of retailers. In turn, retail REITs have reported healthy leasing spreads and improved occupancies in the past few quarters.
- The industrial sector is also benefiting from an improving manufacturing sector. Prologis Inc a major REIT in the industrial sector has released figures in June 2011 indicating improvements across its property base in utilisation, absorption and improved demand for space.
Some KEY RISKS to the current real estate market are:
- If the economic recovery does stall, the progress currently occurring in the property sector will slow. Impediments to economic recovery include high energy and commodity prices; unemployment; the level of debt, in the US and in Europe and the US budget deficit.
- In contrast to the outlook in commercial property, the residential property market not only shows no signs of recovery but is still worsening. Prices have been falling consistently, with house prices experiencing their steepest decline for three years in Q111.
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