REAL ESTATE MARKET
UPDATE
ECONOMIC OUTLOOK FOR METRO DC REAL ESTATE 2011
AND BEYOND
Tuesday, October 26, 2010 * 4:30pm – 8:30 pm * Crowne Plaza Tyson's Corner
Though "irrational exhuberance" could not be found, over 60 appraisal professionals heard real estate experts share a uniformly positive (though somewhat cautious) outlook for the DC metro area at the AIDC Real Estate Update on Tuesday, October 26. Panelists included (also lists pdf of each presenter's presentation where available):
Kevin Thorpe - Vice President and Director of Research, Cassidy & Pinkard – General Economic Outlook Handout
Grant Montgomery – Vice President, Delta Associates – Multi-Family/Condo Market Handout
R. William Kent - Executive Vice President, CB Richard Ellis – Retail Market Handout
Andrew Asbill - Associate Vice President, Grubb & Ellis Company – Office Market
Marc Magazine - Principal of the Humboldt Group – Hotel Market Handout
Here's a sampling of their comments:
- Corporate profits are up and there is nearly $1 trillion in cash looking for a place to invest. It appears that only uncertainty about potential near-term changes tax policy is keeping this cash out of the market.
- The debt markets have started to open up and interest rates remain low; this will expand the pool of buyers moving forward.
- The area has seen good private sector job growth and worker productivity has peaked – which could lead the way to even stronger job growth in 2011.
- By nearly every economic measure, the DC region is outperforming the rest of the country. Stronger job growth, lower unemployment rate, better confidence and healthier consumer spending, though VA/DC are generally doing better than MD.
- Office sales up in 2010. Trophy office properties are selling for record prices but class B properties are languishing.
- Investment sales volume in the DC metro region in year-to-date 2010 has already doubled the volume of sales in 2009.
- Values are clearly rising and cap rates compressing especially in core markets for stabilized assets.
- Apartment vacancy rates are down and absorption is up.
- Top retail shopping centers are selling at low cap rates but fringe centers are struggling.
- Insatiable demand for core office buildings – pricing for this product back to pre-recession levels
- Washington DC and Manhattan, NY are leading the way for recovery in the hotel Industry. Most of the rest of the country lags far behind
- 3rd quarter statistics are up in Rate and Occupancy but these increases are off of record drops.
- Hotel buyers are back in the market and have plenty of cash behind them
- With banks allowing loans to extend, the inventory of hotels on the market is low at this time.
