As 2011 came to a close, some commercial real estate experts found promising signs in often troubled markets.
The office market is gaining interest from investors amid a mixed bag of property-related economic fundamentals such as improvement in employment and business expansions, a recent survey showed.
Commercial real estate continues to offer attractive yields compared with alternative investment vehicles, said respondents to a quarterly poll by consulting firm PricewaterhouseCoopers.
“Despite a sluggish U.S. economic outlook, the majority of surveyed investors view commercial real estate as favorably priced and a good play,” said Mitch Roschelle, the U.S. real estate advisory practice leader at PwC, as the firm brands itself.
Investors are bullish on the general prospects for office buildings, the largest commercial real estate sector. They expect to see occupancy stabilizing and rents rising in many markets this year. Most attractive are office districts that have abundant tenants in technology or energy businesses.
Rent growth is expected to be highest in San Francisco, New York and the Pacific Northwest. Los Angeles ranked ninth among 51 markets as a desirable place to invest.
Newer, well-located industrial and retail properties are sought out by investors, but apartments took the crown as the most favored real estate category.
“Investors continue to view the apartment sector as an attractive play in delivering steady cash flows driven by solid rental demand and rising rents,” said Susan Smith, editor in chief of PwC’s survey. “As a result, investors view this sector as a hotbed for further investment activity.”
Architects report rise in contracts
The nation’s architects reported a slight improvement in business in November, the first uptick in four months.
Architectural contracts are a leading indicator of construction activity, with a lag time of about nine months to a year between the awarding of contracts and construction spending.
The American Institute of Architects, the leading trade group for the profession, said its index of “work on the boards” reported by architects was 52, following a score of 49.4 in October. Any score above 50 indicates an increase in billings.
“Hopefully, this uptick in billings is a sign that a recovery phase is in the works,” said Kermit Baker, the institute’s chief economist. “However, given the volatility that we’ve seen nationally and internationally recently, we’ll need to see several more months of positive readings before we’ll have much confidence that the U.S. construction recession is ending.”
The West lagged behind the rest of the country in November billings with a score of 45.6.
Law firm to occupy Riverside tower
One of Riverside’s oldest law firms, Best Best & Krieger, has agreed to rent 35,000 square feet in theCitrus Tower office building being built there.
The domed, six-story tower at 3390 University Ave. is the only office building under construction in Riverside and San Bernardino counties, according to Lee & Associates. The real estate brokerage represented landlord Regional Properties Inc. in the lease.
Real estate specialists familiar with the Inland Empire valued the 10-year deal at more than $14 million. Citrus Tower is expected to be complete by April.