Expectations and market realities in real estate 2018

Analysis

Expectations and market realities in real estate 2019

Uncharted territory

Investors are traveling into uncharted territory as the US economy’s expansion reaches its 10-year anniversary in July 2019, which would break the record for the longest economic expansion since the government started collecting records in the 1850s. Unemployment has fallen below 4 percent–which would have been almost unthinkable a decade ago–without sparking inflation to rise much above 2 percent.

2019 real estate predictions

At the start of 2019, some investors are worried because they know nothing good lasts forever, and they see potential disruption in the economy – perhaps caused by political turmoil around the world, the potential for continued raising of interest rates, or uncertainty caused by global trade discussions. In 2018, the stock market rode a roller coaster and ended down for the year. So we enter 2019 asking the question: What will the year bring for the US and global economies and the commercial real estate (CRE) market?

Among our major findings:

  • With the US economy on the cusp of its longest expansion in history, the CRE market is expected to perform reasonably well in 2019.
  • Favorable economic conditions, including historic employment gains, are expected to allow room for rent growth in many property sectors. This is despite uncertainty about how long the expansion can last.
  • Prices are inflated in many markets, including CRE markets, but the underlying confidence on value of CRE generally supports the prices being paid today.
  • The industrial sector will likely have the most favorable near-term fundamentals, with the boom in e-commerce fueling demand.
Expectations and market realities in real estate 2019
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