The Results of the 2019 Northeast Ohio Real Estate and Construction Survey Are In – What Can You Expect?
By Roger Gingerich, Partner, Tax & Business Services
Has optimism about Northeast Ohio’s real estate and construction industries prevailed or diminished? What are the greatest perceived opportunities and challenges? How has the Tax Cuts and Jobs Act (TCJA) affected the respondents’ outlook?
The answers to these questions and more are the focus of the 2019 Northeast Ohio Real Estate and Construction Report. Our 12th annual survey, conducted from February through March 2019, was sent to a mix of real estate owners, managers, developers, service providers, contractors and those involved with design/build, among others. Marcumreceived a record number of responses this year.
The survey focuses on issues including the availability of skilled labor, new revenue recognition requirements and new opportunities associated with Opportunity Zones. We polled respondents on the lending environment; expenditures; rental rates in the apartment and residential, commercial and industrial real estate sectors; the perceived effect of the TCJA and the competitive landscape.
Overall, respondents continue to feel optimistic about growth in their markets, but the cautious optimism we reported in 2018 has increased in 2019. Without a doubt, answers to the continued labor shortage are desperately needed in Northeast Ohio, and throughout the nation.
- 67% of survey respondents report lending requirements of 30% or less in equity requirements
- Tax-increment financing (TIF) tripled from 20% in 2017 to 60% in 2019 as a funding source for redevelopment of existing properties
- Opportunity Zones are being well-received as a new tax incentive for investing in economically distressed communities
- Development funding from national and regional banks is on the decline
- Respondents have not cut back on expenses, indicating that the Northeast Ohio real estate market remains healthy
- Rents have outperformed the predictions of 2018 survey respondents across residential, commercial and industrial real estate
- 90% of survey respondents feel their bonding capacity is the same or better than one year ago
- Material cost volatility is one of the top political concerns for the sixth consecutive year
- The lack of skilled construction workers is the greatest perceived threat to the industry for the sixth consecutive year
- Project backlog continues to be strong with 49% of respondents reporting their 2019 project backlog had improved over last year, and only 18% reporting a decline since 2018
- Average construction job size improved according to one-half of 2019 respondents
- Health care is the number-one political issue that will affect respondents’ businesses in 2019
Marcum will release full survey results in September, as well as an analysis of the results.