CRE Executives Cautiously Optimistic: DLA Piper's 2019 State of the Market Survey


Despite concerns about a possible recession and the impact of global trade conflict, commercial real estate (CRE) executives are cautiously optimistic about the US CRE market over the next 12 months, according to DLA Piper's 2019 Global Real Estate State of the Market Survey.

DLA Piper’s survey analyzed levels of optimism and apprehension in the CRE market for the upcoming 12 months. On a scale of one to 10, with one being the most bearish and 10 being the most bullish, most respondents fell in the six to seven-point range, indicating a cautiously optimistic outlook for the next 12 months. Forty eight percent of respondents cited the strength of the US economy and 43 percent cited the abundance of available investment capital as their primary reasons for confidence in the CRE market.

“This year’s survey demonstrated that, despite a slowing global economy, the US CRE market continues to grow, spurred in part by evolution within the industry. Some of the opportunities created by this evolution are innovative, new technologies that are changing CRE and attracting investors into the market,” says John Sullivan, chair of DLA Piper’s US Real Estate practice and co-chair of its Global Real Estate practice. “The continued optimism in the CRE industry is encouraging, of course, but as our survey also uncovered, caution is evident in many corners.”

Similar to the results of previous DLA surveys, political uncertainty was cited a cause for caution. Thirty-seven percent of the respondents with bearish sentiment cited domestic and/or international political uncertainty as the primary reason for their bearishness, and an inevitable end (or nearing end) of the current economic cycle was the second most cited reason for concern. Other reasons for bearish sentiments ranked significantly lower, such as low cap rates (13 percent), reduced foreign investment (4 percent) and decreasing investor appetite (4 percent). The most active investors in 2020 were predicted to be in private equity and pension funds/endowments.

It is clear that technology and innovation, while still evolving, are having a meaningful impact on the CRE market. The survey found that respondents selected tech focused sectors including e-commerce (85 percent), continued evolution of logistics and warehousing (78 percent) and the sharing economy (59 percent) as likely to be the most impactful elements on the CRE market in the upcoming year. The role of technology in the innovation of CRE will be a topic at DLA Piper’s 15th Global Real Estate Summit in Chicago.

When asked what they are the most excited about in the coming year when it comes to the CRE market, one respondent said, “The impact of new business model innovations and new technologies on the valuation of core assets such as office, residential and hotel.”

Other highlights of DLA Piper's 2019 State of the Market Survey include:

  • Almost half (45 percent) agree that investment in Opportunity Zones will increase substantially in the next 12 months. The release of final regulations in early 2019 appears to have paved the way for more investment in Opportunity Zones.
  • Boston, which ranked sixth in the prior survey, was cited as the top US city for CRE investment in the coming year. Denver and Los Angeles came in at a very close second and third, respectively.
  • Canada was cited by 55 percent of respondents as the most likely source of foreign investment in US CRE, aligned with the last survey at 56 percent. Following Canada were Gulf countries (43 percent), Germany (28 percent) and Singapore (27 percent). Israel, which was ranked third in the last report, fell to seventh. China placed in the eighth spot for the second time after occupying the number one position in DLA Piper’s 2016 and 2017 surveys.
  • Only 8 percent of respondents believe Brexit developments will have the greatest impact on the global economy, and despite Brexit, London remains the most attractive international city for CRE investment during the next 12 months. Berlin, Frankfurt and Sydney were also highly ranked. This is similar to the last DLA Piper survey, but Mexico City replaced Hong Kong in the top five and Paris fell to the seventh spot.

The survey coincides with DLA Piper's 15th Global Real Estate Summit held in Chicago on September 24, 2019, which will be attended by many of the executives included in the survey.

The complete State of the Market Survey report can be found at

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