Industry pros expect continued improvement in the office sector. However, a closer look reveals that bullishness is starting to weaken. The latest cycle may have reached its peak, with an increasing number of insiders expecting momentum in fundamentals to stop or begin to reverse in the next 12 months.
Those were the sentiments expressed in NREI’s second annual research survey aimed at gauging industry sentiment on what lies ahead for the office leasing and investment sales markets in the coming year.
Sentiment has moved slightly on where respondents believe we are within the real estate cycle for the sector. Overall, a plurality (42 percent) said the office sector is in the recovery or expansion phase, while 31 percent said it was at its peak. That compares with 51 percent (recovery/expansion) and 27 percent (peak) in the last survey’s results. But few think the sector is in a recession phase (7 percent) or the trough (7 percent). In addition, 12 percent said they weren’t sure.
The NREI research report on the office real estate sector was completed via online surveys distributed to readers of National Real Estate Investor in March and April. The survey yielded 371 responses. Recipients were asked what regions they operated in (and were allowed to select multiple regions). Overall, 45 percent said they operated in the East, followed by the West (44 percent), South (37 percent) and Midwest (35 percent). Half of respondents (50 percent) hold the titles of owner, partner, president, chairman, CEO or CFO. Approximately half of respondents are investors or developers.
The results from the current research were compared against a prior study completed in late 2015. That survey yielded 216 responses.