US Asset Values not expected to peak until 2016 says CPE Survey

Posted on 16 December, 2014 by Jodee Redmond

The results of the latest CPE 100 Quarterly Sentiment Survey point to 2016 as being a peak year for the US market.

Skyscrapers in Manhattan from a low angle

Close to half of the group of industry leaders surveyed (46%) said that asset values and transaction volume across property types have not hit their peak yet and are forecasting that it is still two years away.

Only 15% thought 2017 would be the best year for commercial real estate investment in the current cycle.

Peak of Current Investment Market

When asked when the peak of the current investment market would occur, the executives responded as follows:

Has peaked 2014     8%

2015                           23%

2016                           46%

2017                           15%

After 2017                  8%

 Source: CPE 100 Quarterly Sentiment Survey, 3Q, 2014

The current cycle has been a positive one, with most stakeholders proceeding wisely, although some have been imprudent with their investment or lending decisions. Savvy participants in the market know that even the post upbeat period doesn’t go on forever and are preparing for a correction at a later date by refining their portfolios to ensure they have enough cash available to take advantage of the next downturn when it occurs.

Majority of Executives Upbeat

 Most of the executives are upbeat about the outlook for their own businesses. The majority (71 per cent) said they expect their firms will be performing “somewhat better” in three months, the second-highest number since the Sentiment Survey started tracking results in the early part of 2012. It ranks only behind the 75 per cent of executives who gave a similar answer during the second quarter of this year.

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