Commercial Real Estate: In survey, multifamily remains most favored among property types

Slightly more than a third of the respondents in a recent poll said they believe that multifamily assets will offer the most favorable investment opportunity in 2019 based on recent performance of fundamentals.

The poll was taken of participants in a webcast, known as the Deloitte Dbrief, to showcase the results of the Expectations & Market Realities in Real Estate 2019 – Uncharted Territory report, which was produced by Situs RERC, Deloitte and the National Association of Realtors and released in February. Nearly 4,000 people participated in the poll, which was conducted on Feb. 5. The webcast has been conducted since 2011. Nearly 5,000 people attended the webcast this year.

About 35% of the respondents believed that multifamily assets would offer the most favorable investment opportunity in 2019. That represented the largest percentage among the property types though down slightly from 37% in 2018. This continued a downward trend in the multifamily sector. In 2017, 46.8% said multifamily would offer the most favorable investment opportunity; its favorability has been in the 35%-47% range since 2012. Multifamily has ranked highest among all the property types since the poll began in 2011, when 29.2% favored the sector.

The industrial/warehouse sector was deemed favorable by 18.2% of respondents in 2019, down from about 20.4% in 2018, but still higher than 2017, when the number was 14.0%. The sector’s popularity has been increasing steadily since 2012, except for a dip in 2016 and this year. After ranking No. 3 among the sectors from 2011 through 2016, it surpassed office for No. 2 in 2017, and has remained there since.

Since 2012, the office sector’s favorability has been in the 11%-16% range, and it remained there in 2019 at 13.3%, down from 14.0% in 2018 but up from its low point of 11.5% in 2017. Its peak was in the first year of the survey at 17.5% in 2011.

The percentage of those favoring the retail sector increased slightly from 7.1% in 2018 to 7.6% in 2019. Dating back to 2011, the retail sector has ranked as the second-least favorable sector. The percentage of respondents favorable generally fell every year from 2011 through 2014, rose in 2015 and dropped again in 2016 and 2017 before starting to creep back up.

Hotel was rated the least favorable investment opportunity, with only 5.3% of the respondents preferring the asset class. Hotel has been the least-favorable sector in every year of the polling. Nonetheless, 2019 represented an increase from 4.0% in 2018.

In last week’s Newswatch, we looked at the results of the Dbrief poll regarding volume and pricing in the CRE market. If you missed it, click here to read the full article.

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