The Emerging Trends in Real Estate report released in 2012 by PwC US and the Urban Land Institute (ULI) showed that the best growth that can be expected to occur this year in commercial real estate will be largely confined the urban areas that are “24-hour” cities, with multiple transportation hubs and global access from these hubs.
The continuing economic slump and the slowed job growth rate continues to bog the real estate markets down, and consumer spending is keeping retailers conservative in their leasing and purchasing. According to Mitch Roschelle, partner, U.S. real estate advisory practice leader, PwC, “Job creation is clearly the critical ingredient for a sustained recovery in commercial real estate and the market participants we surveyed uniformly struggled to identify new employment engines. As a result, businesses are focused on squeezing profitability out of productivity gains, and families forced into belt-tightening are using less square footage, which follows ‘The Era of Less’ sentiment we forecasted last year.” He continues to explain, “In 2012, investors expect pricing to level off in the top markets – and overall ‘buy’ sentiment will subside, selling appetites will increase, and more owners will hold until the economy untracks. This is part of 'the new normal' as investors are coming to grips that they may not be selling for more than they paid.”
What this means is that there will likely be an increase in properties for sale in most areas across the nation, but buyer demand will slow in many of them due to continued economic uncertainty until the market levels off. The report, however, did list 10 cities to watch as the Top 10 for expected growth in the commercial real estate sector. These include Washington, D.C.; Austin, TX; San Francisco, CA; New York City, NY; Boston, MA; Seattle, WA; San Jose, CA; Houston, TX; Los Angeles, CA; and San Diego, CA.
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