Rising Interest Rates Top Concern for Real Estate Executives, According to Seyfarth Market Sentiment Survey

Rising interest rates, supply/demand issues and banking regulations are the top three concerns.

CHICAGO — Rising interest rates continue to dominate concerns for U.S. commercial real estate executives in 2017, according to Seyfarth Shaw’s second annual survey of the commercial real estate market.

Seyfarth’s 2017 Real Estate Market Sentiment Survey found that respondents are even more hawkish about interest rate increases this year (98 percent concerned) compared to last year (90 percent concerned). Of these “hawks,” 77 percent expect multiple rate increases in 2017.

Other topics rounding out the top three concerns include supply/demand issues and banking regulations. Notably, political change-over and tax policy rank fourth and fifth this year, overtaking maturing CMBS loans from the previous year.

Concern regarding the industry’s ability to refinance record levels of maturing CMBS loans remains strong with 86 percent of respondents expressing concern, nearly matching the 87 percent in 2016.

Participants were also asked their primary source of equity for 2017, to which 36 percent of respondents indicate that institutional investors would be their primary source of equity. Comparatively, 21 percent report no engagement of third-party equity.

Over two-thirds of respondents believe that the Trump presidential administration will have a positive impact on the 2017 commercial real estate market. Of those respondents, deregulation was top of mind followed closely by tax reform. Notably, as the administration poises to take on Dodd-Frank regulations, many survey respondents single out its potential dismantling as a positive impact for the industry.

Chicago-based Seyfarth Shaw provides legal services in the areas of labor and employment, employee benefits, litigation, corporate and real estate. The company surveyed commercial real estate executives in January.

—Kristin Hiller

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