2013 CRE return expectations climb to 9.8 percent.

Position:Commercial - Commercial real estate
 
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* Commercial real estate investors expect 2013 will yield a 9.8 percent total return--a 70-basis-point jump from the previous (second) quarter's expectation, reported the Pension Real Estate Association (PREA), Hartford, Connecticut.

"All four property types saw their forecast for 2013 rise significantly from last quarter, led by an increase of 170 basis points in the forecast for retail, which is predicted to lead the pack by a wide margin this year," said Greg MacKinnon, PREA's director of research.

Forecasters now expect a 4.0 percent return in the third and fourth quarters, given the 5.5 percent the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index returned in the first half of the year. Investors expect to see a 5.6 percent income return and a 4.2 percent property appreciation return for the year.

Jamie Woodwell, vice president of commercial real estate research with the Mortgage Bankers Association, said the forecast anticipates an average annual increase in property prices of 2.3 percent between 2013 and 2017, which would put 2017 property prices slightly above 2007 property prices--a good sign for loans maturing then.

"And there are signs the market may outpace the PREA expectations," Woodwell said. "The forecast anticipates property prices rising 4.2 percent during 2013--but through the first six months, the NCREIF Property Index has already risen 8.5 percent, putting the index at 92 percent of its pre-recession peak."

MacKinnon said eyes now turn to 2014--"especially given concern...

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