"Annual Expectations and Market Realities: 2006" from Principal Real Estate Investors, Real Estate Research Corporation and Torto Wheaton Research has been selected by ResearchWorldwide.com as its Top Report for December 2005.
The assessment describes global imbalances seeking correction and impacting negatively on capital markets and ultimately on U.S. real estate markets. Acknowledgement is paid to the resilience and strength of the US economy," says ResearchWorldwide.com.
The assessment for the U.S. office market recovery is one of uneven geographical growth due to wide variations in economic health across the country and industries, especially those highly vulnerable to increasing levels of global competition, according to the report.
The US retail market has been well supported by tailwinds from consumer spending, the Web site says. The report found that this is expected to become a crosswind as higher interest rates, increased energy prices, a likely slowdown in home sales, and reduced home equity monetization affect consumer spending levels. Retail tenant consolidation and credit problems experienced by retailers will negatively affect retail space and usage. Overall, the retail fundamentals are still reasonably strong given personal income growth and low unemployment rates.
The warehouse market recovery will continue, however more gradually, due to high levels of new construction and continued productivity gains in the physical logistics industry. However, long-term demand fundamentals for warehousing are solid, given continual strong population growth that will create a significant absolute demand for goods.
Hotels are well-positioned to outperform the other property types over the next few years as the ability to increase room rates upwards exists and increased business travel is anticipated.
"Our conclusions drawn from this report are that the corrections in various markets supply/demand positions look set to occur in 2006 and beyond. Real estate investment performance will be a function of income growth once these corrections have been made. Commercial real estate's investment performance will soon be linked to space supply and demand fundamentals in each market place as opposed to investor hype expectations," says ResearchWorldwide.com.
