Commercial real estate: cause for optimism?


Commercial real estate provided strong returns in 2010 and 2011, in part because it gave investors what they want after the credit crisis--something tangible and something with transparency "

That's one of the most important results of the credit crisis we went through," said Ken Riggs, chairman and president of the Real Estate Research Corporation (RERC), Chicago. Riggs participated in a webinar hosted in April by Deloitte Financial Advisory Services, New York.

Matt Kimmel, principal and U.S. real estate services leader with Deloitte, noted office fundamentals are improving and continuing to build on the strong rebound started in 2010. He said office sales volume is up--including in tertiary markets--though sales began to slow at the end of 2011.

"Office vacancy started to decline in 2011 and is expected to improve further in 2012," Kimmell said.

Industrial sales followed a similar pattern, also increasing in 2011, but slowing at the end of the year. Chicago saw the largest dollar volume in 2011, followed by Los Angeles.

Kimmel said he anticipates further industrial vacancy declines and slight rent increases this year. But he listed various downside risks, including high fuel prices, unrest in the Middle East and unemployment. He said demand for large grocery-anchored retail centers, particularly from institutional and real estate...

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