A new survey released Wednesday shows a slightly brighter outlook for commercial real estate development around the Twin Cities, despite concerns about rising prices for land and building materials.
The semi-annual University of St. Thomas survey asks 50 development professionals in the greater metro area -- investors, financiers and developers but not brokers -- six key questions about conditions two years out for building offices, warehouses and stores. Results above 50 indicate greater optimism.
The overall index rose to 55.6, up from 54.1 last fall -- a modest increase suggesting somewhat stronger future trends. Expectations for strong growth in rents and occupancy boosted the index.
Herb Tousley, director of real estate programs at the University of St. Thomas, said he found those two readings particularly encouraging because "those are the basic fundamentals of operating a property."
On the flip side, respondents see inflation on the horizon. They expect higher prices for land and building materials -- conditions that will hinder development. Tousley said he was somewhat surprised by how negative those readings were. The building materials indicator, for instance, plunged to a low 25.
Tousley said the readings match what he's hearing on the ground as commercial property developers struggle to recover from one of the worst downturns their industry has seen in recent decades.
"There's a little bit more activity," Tousley said. "They're seeing more requests for proposals and things like that."
Jennifer Bjorhus • 612-673-4683
