Commercial
US commercial property headed for recovery -Pru
(Reuters) - U.S. commercial real estate will recover more quickly than in the 1990s downturn as a lack of financing limits new supply and investors flush with cash compete for properties, according to Prudential Real Estate Investors.
Prudential is “relatively optimistic” about office, retail store, apartment and hotel real estate, where large properties typically held by institutional investors are seeing multiple bids, albeit in rare cases when they are offered, Marc Halle, a manager of the Prudential Global Real Estate Fund, said on Tuesday.
“Last time it took five years for real estate values to go down to where they bottomed. … We’ve done that now in about two years,” he told reporters in New York. “So we are going to see a faster recovery, a faster write-up in the market.”
Halle said his outlook refers to properties in major cities.
A lack of construction, due to the lack of funding, could keep new supply from hitting the market for up to five years. Rents are also bottoming, reducing the drag on income that is key to commercial real estate values, he said.
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