Real Estate: Profit, Vision and Stock Loss.

Published Date: 2015-03-17

Real Estate is better than the bull!

Outlook and Profitability
- Outlook for 2015. The outlook for the coming year is the strongest we’ve ever seen in our survey responses. 47% of respondents predict that 2015 will be better and more profitable than 2014. The number who say the future looks “much better than last year” rose to 23%, up 7%. Only 4% believe that 2015 will be less profitable.
- Profitability. 93% of respondents report that their corporate properties were profitable or break-even in 2014. In addition, respondents who say their properties are “very profitable” or “profitable” are on the rise, up 7% over 2013.
- Investment Real Estate Trends. 44% of respondents say, “Yes, I plan on buying more real estate,” rather than, “No, I’m done with real estate” at 13%. What’s interesting is that despite the positive outlook reflected above for 2015, 42% of respondents say they “don’t know” whether they’ll buy more investment real estate. One possible reason for this answer may be the lack of value-priced real estate available on the market today.
Rental Rates
- Variance: Changes in Rates. 35% report having higher or much higher rates in 2014 – up slightly from the previous two years. 61% of respondents say they offered the same rental rates in 2014 as they did in 2013. Only 4% lowered their rates, and for the first time ever, no one reported offering “much lower” rates.
- Actual Rental Rates. In 2014, average rental rates went up for all property sizes, except four-bedroom units. (We believe the latter may reflect a variance in the sample size.) The largest increases in rental rates were for one-bedroom units and five+ bedroom units.
- Rental Discounts. Consistent with the past two years, two out of three of respondents say they offer discounts for longer-term leases. The majority of discounts range from less than 5% off rental rates, up to a 10% to 14% reduction in rental rates.