NEW YORK, June 25, 2007 (PRIME NEWSWIRE) -- A steady U.S. economy, continued investor confidence and favorable market conditions underscored the commercial real estate sector's strong showing during the second quarter of 2007, according to PricewaterhouseCoopers' Second Quarter 2007 Korpacz Real Estate Investor Survey(r), now in its 20th anniversary year.
Stronger than expected job growth in May and continued strength in corporate profits during the first three months of this year helped fuel business expansion, which in turn led to increased strength in the office segment, where close to 8.5 million square feet were absorbed during the first quarter of 2007, according to the survey.
"As businesses grow and expand, there is a greater need for additional workers and the need for more space," said Tim Conlon, U.S. Real Estate leader for PricewaterhouseCoopers. Overall vacancy rates dipped to 9.9% in the national Central Business District (CBD) office market and 14.3% in the national suburban office market during that time, the survey noted.
"Positive trends occurring in both the U.S. economy and the industry in general are keeping investors optimistic about the near-term performance of the commercial real estate industry," said Peter F. Korpacz, director of Global Real Estate Research for PricewaterhouseCoopers. "The potential for higher returns also is spurring investors' interest in more opportunistic areas, such as office properties with vacant space and/or near-term lease expirations, especially in some of the nation's core markets."
Other key findings include:
* At the current pace, last year's national record sales volume
for office assets will likely be surpassed by midyear 2007.
* Highest sales prices continue to be paid for core assets in
the tightest markets, including: Manhattan (averaging $711.00
per square foot), San Francisco (averaging $435.00 per square
foot), and Washington, DC (averaging $416.00 per square foot).
* While acquisitions by foreign buyers in core office markets
have increased, private equity funds accounted for more than
half of all office acquisitions thus far in 2007.
The Korpacz Real Estate Investor Survey(r), which is celebrating its 20th year of publication, is one of the industry's longest continuously produced quarterly surveys. The current report provides detailed overviews of 29 separate markets, including the national retail markets (regional mall, power center and strip shopping centers); overviews of 17 major office markets, including the recently added markets of Denver, Phoenix and San Diego; and national overviews of the CBD and Suburban Office, Flex/R&D, Warehouse, Apartment, Net Lease, and National Development Land markets. The report also features up-to-date commentaries concerning Valuation Issues, Technology News and Trends and Economic News.
The Second Quarter 2007 edition also features the second installment of a four-part retrospective that chronicles the history of the Korpacz survey and its key findings on the real estate industry from 1993 through 1998. Future installments will appear in subsequent quarterly reports.
Information about subscribing to the PricewaterhouseCoopers Korpacz Real Estate Investor Survey(r) can be found at www.pwcreval.com. Members of the media can obtain an electronic copy of the full report by contacting thomas.derr@us.pwc.com or phone: (646) 471-8268.
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