Qualified Optimism for Commercial Real Estate Outlook

University of St. Thomas survey of Minnesota’s commercial real estate insiders points to favorable trend in five of seven areas

The Shenehon Center for Real Estate at the University of St. Thomas Opus College of Business today released their third Minnesota Commercial Real Estate Survey pointing to a greater optimism by developers, investors and finance professionals within the commercial real estate field. A panel of 50 industry leaders participated in the twice-a-year poll, delivering views on six questions regarding expectations and future markets for conditions between now and 2013. The survey, a real estate crystal ball for the Twin Cities, serves as a forecasting tool for the industry based on future expectation of rents, occupancy, land price, building materials, rate of return, equity/LTV and composite. The study is available on the Real Estate Matters blog.

Research was conducted by Herb Tousley, Director of Real Estate Programs at the University of St. Thomas, and Dr. Thomas Hamilton, Associate Professor of Real Estate at the University of St. Thomas. The results, collected through May, were determined by a 0-100 index, depicting views over 50 as favorable, at 50 as neutral and below 50 as pessimistic. Four of the seven indicators, Rents (70.8), Occupancy (71.4), Equity/LTV (62.5) and Composite (55.6) share favorable views for the coming years, higher than May and November 2010; however, optimism is qualified as Land Price (37.5) and Building Materials (25) both dropped, depicting higher pessimism. Rate of Return (51.6) is lower than the previous surveys, but still optimistic.

Tousley said, “The road to recovery is never easy or quick but financing terms are getting better, equity is on the rise and rent and occupancy has shown solid growth – making for encouraging times for the Twin Cities.”

About the UST Opus College of Business

With a vision to educate highly principled global business leaders, the University of St. Thomas Opus College of Business offers undergraduate concentrations in 13 fields and master’s degrees in seven programs, including day and evening MBA programs. The school enrolls another 4,300 participants annually in executive-education classes. Its Shenehon Center for Real Estate, one of 12 centers and institutes, provides research and develops programs impacting the real estate industry, and has been the academic voice involved in several local and national real estate industry organizations.