5. Jim Berry, U.S. real estate sector leader, Deloitte
“In our Deloitte Commercial Real Estate Outlook for 2020, we surveyed 750 owners and operators of real estate across 10 countries. Our survey respondents have a divergent view, generally, pointing to cautious optimism about how the U.S. commercial real estate industry will perform over the next 18 months: 20 percent were very optimistic, 55 percent were somewhat optimistic, 13 percent were neutral, and 12 percent were somewhat pessimistic.
A solid 73 percent of respondents expect increases in transaction activity. While 56 percent of our surveyed executives anticipate an increase in cost of capital, 67 percent expect more capital availability. Office property respondents are most optimistic about the transaction and capital markets—85 percent and 74 percent believe transaction activity and capital availability will grow, respectively, whereas 26 percent anticipate a decline in the cost of capital. In contrast, hotel property respondents are least optimistic, with 27 percent and 35 percent expecting a decline in transaction activity and capital availability, respectively, and 52 percent expecting an increase in cost of capital.
Several macroeconomic concerns, such as the ultimate impacts of trade disputes, and global macro events, such as Brexit, weigh on what are otherwise positive fundamentals. The commercial real estate industry seems to be on solid footing to attract capital. If there is an economic downturn, the short-to-medium-term challenge is expected to be budgetary pressures weighing against the requirement to make technology investments, which could impact longer-term returns.”