This year should bring mainly positives for the US commercial real estate market but there are also some trends that will likely impact CRE here and globally.
A new report from real estate firm Avison Young says that the momentum seen in the US in 2019 should endure in 2020 with most markets showing healthy occupancy levels and rent growth.
New supply appears to be in line with demand as new supply in offices and industrial is met with restraint from lenders, equity sources, and developers. This should keep concerns of overbuilding in check.
Economic and labor market growth, while remaining positive, will continue to be dampened by global trade concerns and the 2020 election.
"Understanding economic, geopolitical and business drivers is central to how we help clients navigate the current market and prepare real estate strategies that have resilience for the future," said Dr. Nick Axford, Global Head of Research for Avison Young.
Top trends that will impact CRE
Among the trends that Avison Young says will impact commercial real estate in the US and globally are:
- Lower for longer: How investors are dealing with a low inflation, low interest rate world.
- Power to the people: Landlords, developers and occupiers need to pay increasing attention to local political activism, as today's street protests increasingly signal tomorrow's policy initiatives.
- (De)globalization: The pace of globalization is slowing, and in some areas is starting to reverse as nearshoring and the localization of supply chains gathers momentum.
- Building resilience: Cities across the world are leading the charge in responding to climate change, to ensure economic, social and environmental sustainability
- (Place)making an impact: Placemaking is becoming the focus of socially responsible investors looking for impact investment opportunities.
"In the US, a strong labor market is supporting market stability, Canada's market is buoyed by solid fundamentals, and in the UK the political focus is shifting to the debate over the country's future trading arrangements with the EU," added Axford. "Though uncertainty remains throughout the world, our forecast reveals that opportunities remain across all sectors - driven by an increased focus on responsible investing, climate change, the implications of continued low interest rates, and other factors."
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