Outlook for Commercial Real Estate from Bob O’Brien, Possible Market for CFOs

Outlook for Commercial Real Estate from Bob O'Brien, Possible Market for CFOs
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Bob O’Brien provides expert insights into the CRE market and information about where investors involved in CRE should be looking and what they should be expecting in 2013.

All industries and sectors of business are affected by issues of finance. When people think of CFOs, many often assume this refers to people in charge of the financial sections of large corporations and institutions. While many CFOs do work in these roles, that doesn’t mean all of their investments and activities are directly related to corporations and the business they conduct. Some CFOs look to other markets to provide strong returns for their investments. One of those areas is Commercial Real Estate (CRE).

CRE: 10 Factors

Bob O’Brien, vice chairman and partner of U.S. Real Estate Services Leader at Deloitte & Touche LLP, wrote an in depth report concerning trends and issues in the CRE industry for Deloitte. This study aimed to help financial leaders of CREs, especially their CFOs, properly position their companies during this slow recovery. It has strong insights and information for anyone interested in CRE and the finance issues involved, including the following and more.

“Macroeconomic Fundamentals”

Bob believes that Europe’s recession and economic troubles will slow down the growth in the US and elsewhere. Still, “demand for high-quality properties is expected to remain intact.” Investors appear to be seeking stable and consistent returns over more varied ones. CFOs working in CRE may want to focus their attention on these high-quality properties in the next few years.

“CRE Fundamentals”

Bob doesn’t see pre-recession levels of revenue growth returning any time soon. CFOs should tailor their expectations and opportunities for CRE accordingly. He writes that “lack of new development activity does not bode well for long-term growth.” Expectations for future growth are not exactly booming either.

“REITs and Private Equity Real Estate (PERE) Funds”

According to Bob, “REITs’ access to equity and debt capital continues to favorably position them to acquire properties.” This, in addition to PERE investments in alternative markets, can help the CRE market to expand and grow. CFOs of CRE groups should be paying attention to these, especially towards investment opportunities in Asia, parts of Europe, and a few other emerging markets which are experiencing above average growth and returns.

“Globalization of CRE”

Obvious uncertainty in Europe has been putting CRE investors on edge, and they have been focusing on “class A properties across the globe” because of this. The study notes that there are currently “favorable investment opportunities” in certain areas of Europe. More striking are the high-growth, high-return opportunities in CRE that currently exist in Brazil and Asia Pacific regions.

Be sure to look at Bob O’Brien’s additional insights into six other factors affecting CRE in 2013. The information is excellent and provides even more insights into CRE, investment opportunities, and the future of the market.