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PwC U.S. real estate practice leader Mitch Roschelle weighs in on the state of the commercial real estate market.
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Alright well one of the best performing sectors believe they're not -- this year now commercial real estate yields on the rise and price Waterhouse Coopers.
Really bullish on the sector right now joining me now -- -- -- from a new survey they just published.
Duration best now mistress -- -- thank you for being here -- the commercial real estate and has been on the uptake actually for three years now.
Some are now worried that that the shine is gonna come off next year when he is.
I don't think so I think yields which have compressed in commercial real estate is really a function of supply and demand and supply of capital going into the asset class.
If you look at that Wilson asset class one of things you realize coming out of recessions have durable -- is the volatility in returns on real estate are much less than they are.
Where where is that is that solid play is -- in apartments is -- in shopping malls is that in retirement homes -- weaken the best group is underneath.
Coming out of recession apartments were -- they were benefit the favored that the interesting thing in survey that we pub PWC just published.
We've been doing this for 26 years are -- and investor -- -- we have a lot of times.
Look at it.
Is retail so retail asset class every thought left for dead yields in real state.
Retail real estate compressing just like the rest.
We're showing him up obviously that boomer demographic because it over to the ones they're gonna be frankly heading into those old folks -- if you will bring up -- -- -- like.
Let me ask you about this it seems like retail is coming back you were just talking about that it seems that.
A lot of those the strip malls that you write about the nation has turned to fill up once again break even -- capacity -- is that gonna continue next or do you think.
There's clearly some oversupply every tell but what's interest thing about retail real estate is that brands have a verbal component to -- so as sales go up.
Rents go up so if you look at the elasticity of the return potential.
I think investors are betting that as economy improves retail real states can be come more value.
Outlet malls to me one of the big things we've seen in this particular retail shopping season has been outlet -- that's where the spending has happened do you think that that go on the other side of the investment -- -- the stocks would be.
The -- level companies companies like Simon that run.
Those outlet malls on them.
You know it investors' love value.
Shoppers love value and I think the -- malls that are doing well it's really the value play as long as -- stores can have products for them to buy I think they gonna -- You look at the data does spdr the Rhee and it's up about gosh fourteen and a half percent right now at this point for the last year I mean that's a really strong return for -- -- -- are wondering if I play into this re now analysts are gonna get this next year.
You know investors like cash flow of one of things BP to receive observed over time is that cash flying investment classes do better over time especially in.
Volatile times the non cash -- asset classes.
That's validated right there with returns on rates not only did they go up in price from total return perspective but you get cash flow and -- the way and when you look it -- savings.
About dividends bites did it and these -- dividend bearing investment reits have to pay dividends and that and that's one thing you can count on so that's why capital flowing through now on the trash -- selling at some survey and have a Hollywood -- thank you for being -- thank you fab.
Quarter tell.
