Survey: CRE professionals still leery about recovery

  • Blog Post by: Janet Moore
  • June 18, 2013 - 4:47 PM

Commercial real estate folks are just a tiny bit hesitant to call the recent recovery a hearty one in their business.

That, according to the seventh semi-annual Minnesota Commercial Real Estate Survey, which was released by the University of St. Thomas' Shenehon Center for Real Estate on Tuesday.

The results, tallied from a group of 50 CRE experts locally who work in development, finance and investment, shows "lingering concern" about commercial real estate conditions two years from now. It's a trend that the survey indicated last year, as well.

Those who participated were asked about their expectations for vacancy rates, rental rate growth, land and building material prices, new project financing and rates of return.

The survey showed a composite score of 47 based on a 0 to 100 index. An index score higher than 50 indicates a more- optimistic view of the market, while a score under 50 skews towards more pessimistic view. This is the second time the score has dipped below 50, "indicating a less-than-neutral expectation regarding the future market forecast," the survey stated.


Herb Tousley, the University of St. Thomas director of real estate programs and conductor of the survey along with Associate Professor Tom Hamilton, said in a statement that there are some key differences when compared with results from last year. They including a higher level of confidence that rental rates and occupancy will continue to grow into 2015.


The index for rental rates increased from 67 to 69 in the survey, reflecting a growing confidence in theburgeoning market. Occupancy levels decreased by a point this year, though experts continue to be optimistic that they will turn around as the economy recovers and demand for space increases.

High land prices and the rising cost of building materials continue to drag on the sector, however.

Janet Moore covers commercial real estate for the Star Tribune.

© 2018 Star Tribune