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The Hoyt Organization
San Francisco Named Top City in 2013 Real Estate Forecast
- San Francisco displaces Washington, D.C., as top-ranked city.
- Apartment sector remains investors' favored property type.
- Secondary markets to gain favor as investors search for yield beyond high-priced core markets.
- Office sector has started to come back; retail "not as bad as feared;" hotels are "surprisingly good."
- U.S. is still seen as a safe harbor for global investment.
"This is our recovery," Jonathan D. Miller, principal author of the report, said when the Emerging Trends in Real Estate forecast was presented at ULI's Fall Meeting in Denver. "It's a recovery, but anchored in considerable uncertainty," Miller said. He cited Europe's economic troubles, a slowdown in China, and the "fiscal cliff" looming in the United States. But the forecast says modest gains in leasing, rents, and pricing will extend across U.S. markets from coast-to-coast and improve prospects for all property sectors.
According to survey participants, despite a slower-than-normal real estate recovery track, U.S. property sectors and markets will register noticeably better prospects as compared with last year. Recent job creation should be enough to increase absorption and push down vacancy rates in the office, industrial, and retail sectors, helped by the limited new supply in commercial markets. Robust demand for apartments should hold up, survey respondents indicate, even as new construction ramps up – and even the housing sector makes progress in most regions. Additionally, improving fundamentals should help with rents and net operating incomes, building confidence about sustained growth and strengthening recent appreciation.
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