Survey says: Development future looks good in Midwest markets

If the analysts at KPMG are on their game, the future of real estate development in the Midwest, including Kansas City, should prove to be bright.

Citing the benefits of relative market stability and the expectation of solid returns for investors, officials with the firm recently offered predictions that there should be a steady increase in commercial land deals throughout the region. The details were made public in the company’s 2014 Commercial Real Estate Outlook Survey.

According to the survey of real estate executives, 31 percent of respondents said that the Midwest offers the greatest opportunity for investments. That compares with 16 percent who said that in 2013. 

A region-by-region comparison does give the edge to the Southeast U.S. as the most likely area for good returns. The Southwest comes in second in the eyes of the industry, with 33 percent of executives giving that region the thumbs up. But the Midwest fared better than either the Northeast or Northwest sections of the country.

Asked what particular sectors of commercial real estate might do the best, the executives reportedly painted with a broad brush. Office, industrial and retail areas are all expected to rise, but most executives agree that the sector most likely to increase is multi-family construction. Fifty-three percent of respondents said the multi-family sector will increase significantly in 2015.

Another indicator of development enthusiasm can be seen in projections regarding capital spending. Sixty-eight percent of executives surveyed said it would rise. Last year, that sentiment was expressed by 60 percent of respondents.

With expansions in development comes a commensurate increase in potential legal challenges. To avoid possible financial and contractual sinkholes, the wise developer is one who consults with legal counsel with deep experience handling the full range of possible issues.

Source: REJournal, “KPMG: Midwest more attractive to developers, investors,” Dan Rafter, Sept. 3, 2014 

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