Moderate growth expected for commercial real estate

The US commercial real estate industry should see moderate growth through much of 2019 according to new forecast from the Urban Land Institute

Moderate growth expected for commercial real estate
The US commercial real estate industry should see moderate growth through much of 2019 according to new forecast from the Urban Land Institute.

The survey of top real estate economists calls for national vacancy or availability rates to rise modestly for all property types except industrial over the next three years; industrial will stay flat.

Commercial real estate prices are projected to rise by an average of 4% while transaction volumes will fall 9% to $450 billion in 2017, with further decline to $427 billion in 2018 and $414 billion in 2019.

Expectation for the single-family housing market improved over the past six months and the report expects starts to reach 960,000 in 2019.

Home price growth of an average 4.8% is forecast over the next three years.

Respondents to the October 2017 ULI Real Estate Economic Forecast downplayed the possibility of a spike in economic growth through 2019,” said ULI leader and survey participant William Maher, director of North American strategy and research at LaSalle Investment Management.

“At the same time, they confirmed that the current expansion could become the longest one since records were kept starting in the 19th century. While real estate will benefit from continued growth, U.S. property markets are close to equilibrium, which should result in inflationary rent growth and returns in the single digits for core real estate and equity real estate investment trusts (REITs),” added Maher.

The report is based on a survey of 48 of the industry’s top economists and analysts and is a three-year economic forecast.