2004: "TRANSITION" PERIOD IN REAL ESTATE.

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Author: Reynolds, Jamie

Investors' outlooks on the American commercial real estate market for next year range from "at best less sanguine" to "cautiously pessmistic"--at least according to a recent survey released by the Urban Land Institute (ULI) and consultant PricewaterhouseCoopers.

The 25th edition of the annual report Emerging Trends in Real Estate polled more than 350 commercial-property authorities and found that 2004 is largely perceived as a "transition" period. Although the real estate market will shift toward a slight recovery, the survey says, this will be countered by a lack of new jobs being created in the United States, an increasing number of jobs going overseas, and governmental financial difficulties.

The study expects rents and values to stay flat in most markets, with the office sector suffering the most. Apartments and hotels, however, should show a minor improvement. The flow of capital will stay solid initially, adds the report, but may weaken as a stronger stock market draws investors away from property.

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By Jamie Reynolds