Owners, investors feeling more confident.
These are the findings of the second annual IREM Business Barometer, a national research study conducted by the Institute of Real Estate Management.
The study asked participants to rate the current health of business condition for their companies or firms (based on the idea that the total responses would provide an accurate reflection of the general state of the real estate economy). The vast majority of respondents (72 percent) described their business conditions as either "very good" (37 percent) or "good" (35 percent). Another 11 percent felt that their business prospects were in excellent shape.
A year ago, however, only 28 percent of 1995 Barometer respondents through the industry's health was very good and just 8.5 percent rated it "excellent." The strongest consensus (42 percent) was that industry conditions were merely "good."
Even more encouraging, the 1996 participants strongly agreed that the market recovery will pick up even more steam next year. A solid 46 percent of respondents predicted that business conditions for their organizations would be very good in 1997, while a full 15.5 percent expected an excellent business climate.
The IREM Business Barometer represents the opinions of some 735 real estate professionals. The majority of the participants (41 percent) were property managers. Asset managers accounted for 11 percent of participants, while another 13 percent were real estate owners or investors.
In December 1995 and January 1996, as part of the Institute's national Industry Forecast Meetings program, IREM chapters held local economic forecast sessions featuring industry experts giving their predictions for the coming year. The forecast meetings were held in 20 major metropolitan areas coast-to-cost: Anchorage, Boston, Chicago, Honolulu, Houston, Los Angeles, Milwaukee, Omaha, Orange County (CA), Philadelphia, Phoenix, Pittsburgh, Portland (OR), St. Louis, San Diego, San Francisco, San Jose, Seattle, Tulsa, and the Newark area.
The real estate professionals who attended these sessions were asked to fill out a questionnaire giving their own predictions for the local real estate economy in 1996. In addition to the general questions about business conditions, they were asked for their opinions on whether occupancy levels and property values for four key property types - conventional apartments, office buildings, industrial properties, and shopping centers - would increase, decrease, or stay the same. The Institute than combined the results of these 20 local surveys into a single national Business Barometer forecast.
Reflecting the industry analysts' assessment that the mud-1990s real estate recovery is more like a gentle return to market equilibrium than a major boom, the majority of Barometer participants felt that occupancy levels and property values for all property types in their local markets would show modest rather than big increases in 1996. The outlook was most sanguine for industrial properties and office buildings, with about 56 percent of respondents in both cases predicting a slight increase in occupancy while 58 percent and 49 percent respectively thought property values would rise slightly.
For apartments, the majority of respondents - nearly 60 percent - forecast a small improvement in property values. Fifty-one percent said apartment occupancy levels would increase slightly, while another 33 percent thought they would stay the same.
Business Barometer participants were less confident about shopping centers, however. Only a 42 percent majority predicted that occupancy levels and property values for the retail segment would show a slight increase. Approximately 20 percent of respondents thought occupancy and values would actually decline slightly, while about 34 percent said "no change."
The Institute of Real Estate Management, an affiliate of the National Association of Realtors, was founded in 1933 to further high standards of performance in the real estate management field. IREM's mission is to educate real estate managers, certify the competence of qualified individuals and organizations engaged in real estate management, serve as an advocate on issues affecting the industry, and enhance its members' professionalism so they can better meet the needs of those who use their services.
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|Publication:||Real Estate Weekly|
|Article Type:||Industry Overview|
|Date:||May 29, 1996|
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