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Commercial Real Estate Execs Report Policy Uncertainty Constraining Full Economic Recovery

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SOURCE Real Estate Roundtable

Q2 Survey Participants Report Domestic Policy Indecisiveness and Geopolitical Risks Loom Over Improving Fundamentals and NOI, Plentiful Debt and Equity

WASHINGTON, May 2, 2014 /PRNewswire-USNewswire/ -- As U.S. commercial real estate markets continue to show signs of moderate improvement, the ramifications of domestic policy uncertainty in Washington and risks of geopolitical conflicts continue to impede the overall economy's progress toward a healthy recovery, according to The Real Estate Roundtable's Q2 Sentiment Survey, released today.

Real Estate Roundtable President and CEO Jeffrey DeBoer

With senior industry executives reporting slow but steady improvements in fundamentals and net operating income (NOI) – especially in non-"gateway" markets – the Q2 Sentiment Index dipped to 67 from the previous quarter's score of 69.   One influence on the slight dip in the Overall Index are survey participants' concerns about how geopolitical relations with China and the Eurozone may create interest rate volatility in the U.S.  Yet, the majority of respondents cited ongoing policy indecisiveness in Washington as the main cause for their cautious outlook on economic growth.

Issues of crucial importance to real estate that remain undecided include the looming expiration of the Terrorism Risk Insurance Act (TRIA) on Dec. 31, which if allowed to sunset would result in a commercial real estate credit crunch, impede liquidity and lead to wide-spread job losses.  Other policy issues awaiting action include landmark energy-efficiency legislation (S. 2074), which has broad-based stakeholder support – and reform to the Foreign Investment in Real Property Tax Act (FIRPTA), which could spur a new wave of inbound real estate investment. 

"Over the last six quarters, our Sentiment Index of commercial real estate executives has reflected the flat growth trajectory of the overall economy, and has clearly shown how a prolonged period of policy indecisiveness impedes a break-out in economic growth," said Real Estate Roundtable President and CEO Jeffrey DeBoer.  "It is time for U.S. policymakers to take collective action and reauthorize TRIA now – to prevent serious economic harm later.  Pass job-creating measures such as the 'Shaheen Portman' energy-efficiency bill before summer begins – not after mid-term elections.  And reform FIRPTA policy to increase overseas investment in American markets, which are still struggling to heal from recession," added DeBoer.

The Real Estate Roundtable's Q2 Sentiment Index report is available at www.rer.org/Q2-2014-entire-Sentiment-Report/.  The Sentiment Survey is conducted by Chicago-based FPL Advisory Group on behalf of The Roundtable.

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