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Kim_Gatley
Kim Gatley
S
enior Vice President & Director of Research at REOC San Antonio

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Housing market recovery will continue to lift commercial real estate

Economic expansion and job growth will drive recovery as interest rates rise.  Recovery in the housing market augers for continued improvement in U.S. commercial real estate over the next two years.

Despite challenges – including gradually rising interest rates and government spending cuts – the outlook for commercial real estate is positive. The U.S. economy is expected to grow by 1.9% in 2013 and accelerate to 2.8% in 2014. This growth will spur the creation of 4.8 million jobs over the next two years. As job growth accelerates, so too will demand for commercial real estate, leading to continued improvement in vacancy rates.

“The key difference between the initial recovery in commercial real estate and future growth will be the contribution of interest rates,” says James Marple, TD Senior Economist and the author of the study. “As interest rates rise, the spread between commercial real estate yields and government Treasuries will narrow. Prospects for price growth will then depend on improving economic fundamentals.”

Click to read entire article: TD Economics: Housing market recovery will continue to lift commercial real estate (MarketWatch, The Wall Street Journal, PRNewswire via COMTEX, 4-9-13)

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