Panelist Weighs In on the Economy and Commercial Real Estate

Suzanne Mulvee

Suzanne Mulvee, CFA, senior real estate economist at Property and Portfolio Research, will be part of an economic outlook panel on day two of CCIM Live!

We spoke with her recently about the economy and its impact on commercial real estate.

CCIM: At Property and Portfolio Research, you design investment strategies in the major property types. Which property types do clients favor right now and why?

Suzanne Mulvee: Multifamily has been the darling of institutional investors for the past two years, but that may be changing. Fundamentals across multifamily are nearly recovered, and net operating incomes have jumped, but this success is now well priced. With multifamily construction heating up, investors may cycle toward the other property types. Office in particular may be a good play.

CCIM: You'll participate in an economic outlook panel at CCIM Live! in October. A lot can change in this economy in three months. What are some factors that could change your economic outlook between now and the conference?

Mulvee: With the global economy slipping toward stall speed there is greater risk that a shock to the system knocks us into a recession. Worse, the number of risks to be concerned about are numerous — Europe, China, Iran, sovereign debt levels (both here in the U.S. and abroad), fiscal tightening, etc. The central bank policy response to combat any shock would likely be impressive, but how effective is not clear. Against this backdrop, it is not surprising that the consensus assumption is slow growth and fat tail risk.

CCIM: Many CCIMs work in secondary and tertiary markets. What are the major retail trends you're tracking in these markets?

Mulvee: Secondary and tertiary markets tend to be less expensive and therefore attract new residents, which drives local commercial real estate demand. The housing bust severely curtailed the mobility of the population, but that is changing. With more and more pockets of the housing market recovering, migration is picking back up. The benefits accrue first to the big markets like Dallas and Phoenix but should eventually impact the smaller markets.