It’s Optimism by a Nose in Latest RCLCO Survey
An end-of-year survey finds that expectations remain positive, despite the state of the market cycle, as tax changes continue to loom.
By Scott Baltic
Len Bogorad – RCLCO Managing Director
Set aside the Mueller investigation, #MeToo and pretty much whatever else grabbed headlines last year. Despite all the political, media and social turmoil in 2017, part one of the year-end Sentiment Survey from RCLCO indicates that, in the eyes of numerous senior executives, the CRE outlook is a stable and surprisingly positive one.
Overall, it seems to be a case of “Not just more optimism, but also less pessimism.” For example, though the general expectation is of moderately declining market conditions through this year, nearly half of respondents (45 percent) believe that the next downturn won’t start till 2020 or later. In fact, the report, by RCLCO Managing Director Len Bogorad and Associate John Rendleman, notes that “respondents continue to push the anticipated downturn farther into the future.”
One of the reasons for this positive outlook is the stock market’s performance, leading survey respondents to look for continued economic expansion.
The 2017 Mid-Year Sentiment Survey showed mostly cautious optimism, despite fading enthusiasm for the president and “his ability to deliver on concrete policies.” As it stands now, the RCLCO Real Estate Market Sentiment Index is higher than both the mid-year number and predictions six months ago of where it would be now.
Caution, not clarity with taxes
A key focus of the EOY survey was the effect of the tax overhaul on the U.S. real estate market. Respondents generally said that they expect the Tax Cut and Jobs Act to have “only moderate effects on real estate.” More specifically, some said it’s too early to know what the bill’s effects will be, given the lack of clarity about its details. The Sentiment Survey relies on a nationwide pool of predominantly experienced, senior executives at CRE companies, including developers and investors.
Part 2 of the year-end report will be out later this week. Meanwhile, part one is available on the RCLCO website.
Image courtesy of RCLCO
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