International commercial brokerage CBRE has recently published its US Real Estate Outlook report for 2019. Here are key takeaways for investors:
- GDP: Similar though slightly lower GDP is anticipated for next year since both business and consumer confidence is currently high and this creates economic momentum into the new year. This would likely result in continuing interest rate hikes, and inflation from wages and tariffs is another potential issue.
- Office: Office-using employment growth is continuing to drive demand, even with counterbalancing scenarios regarding labor market constraints and more flexible space offerings. New construction will help meet current consistent demand for highly amenitized space in employers’ efforts to attract best talent in tight labor market.
- Retail: Total retail sales increased 6.1% in Q3 2018 compared to a year prior, which is the largest increase since 2012. Retail continues to do well in a strong economy due to high consumer confidence, strong job market, lower taxes, and wage growth. Redevelopment of properties and emphasis on multi-channel sales strategies (including Internet tied to brick & mortar) are anticipated to continue as important recent trends.
- Multi-family: Although new construction is anticipated to be well absorbed, vacancy rates will likely increase a bit plus rent increases will likely be lower than historical averages due to after-effects of recent market surges. Trends remain very favorable for multi-family to be an overall strong and secure investment. Affordable workforce housing remains an area of very high demand.