Commercial real estate brokers are optimistic about their industry’s growth prospects for 2019, according to a poll of brokers that Transwestern released last month. They are buoyed by strong consumer and business confidence, steady employment growth, and the anticipation of available debt and equity liquidity.
The survey explored the sentiments of brokerage professionals about three sectors: offices, medical offices, and industrial.
Over half of the 107 respondents, 52%, believe that leasing velocity, tenant walk throughs, and asking rents in the U.S. office market will be slightly to significantly higher in 2019. These factors will be driven primarily by continued economic expansion, lease expirations coming due, and rising interest rates.
Amenities continue to spur tenant interest, with access to transportation/parking and reliable WiFi service leading the “very important” list.
More than three quarters of respondents expect development levels to be flat or slightly higher in 2019, with select markets showing concern of oversupply and rising construction costs.
Most brokers foresee flat to modest growth for office pricing, investor interest and cap rates. Image: Transwestern
Nine of 10 respondents expect asking rents for medical offices to be slightly higher in 2019, driven by leasing activity. Demand is being driven by a growing and aging population. Cap rates in the medical office sector will be flat compared to 2018, predict 80% of respondents, with most also expecting investor interest to rise over the year.
While the average index of 122.1 for the industrial sector’s prospects next year was down from 130.9 for last year’s outlook, respondents still expect tenant walk throughs, asking rents, and development to be higher for this sector, driven by ecommerce, a growing population demanding consumer goods, and better economic conditions.
Seventy-two percent of respondents expect higher investment interest in 2019, as the industrial market strengthens and select REITs shift focus away from office to industrial properties, especially in the Northeast and Mid-Atlantic regions.
Brokers expect an uptick next year, particularly in asking rents and tenant prospects, for the industrial sector. Image: Transwestern
Related Stories
Market Data | Jan 7, 2022
Construction adds 22,000 jobs in December
Jobless rate falls to 5% as ongoing nonresidential recovery offsets rare dip in residential total.
Market Data | Jan 6, 2022
Inflation tempers optimism about construction in North America
Rider Levett Bucknall’s latest report cites labor shortages and supply chain snags among causes for cost increases.
Market Data | Jan 6, 2022
A new survey offers a snapshot of New York’s construction market
Anchin’s poll of 20 AEC clients finds a “growing optimism,” but also multiple pressure points.
Market Data | Jan 3, 2022
Construction spending in November increases from October and year ago
Construction spending in November totaled $1.63 trillion at a seasonally adjusted annual rate.
Market Data | Dec 22, 2021
Two out of three metro areas add construction jobs from November 2020 to November 2021
Construction employment increased in 237 or 66% of 358 metro areas over the last 12 months.
Market Data | Dec 17, 2021
Construction jobs exceed pre-pandemic level in 18 states and D.C.
Firms struggle to find qualified workers to keep up with demand.
Market Data | Dec 15, 2021
Widespread steep increases in materials costs in November outrun prices for construction projects
Construction officials say efforts to address supply chain challenges have been insufficient.
Market Data | Dec 15, 2021
Demand for design services continues to grow
Changing conditions could be on the horizon.
Market Data | Dec 5, 2021
Construction adds 31,000 jobs in November
Gains were in all segments, but the industry will need even more workers as demand accelerates.
Market Data | Dec 5, 2021
Construction spending rebounds in October
Growth in most public and private nonresidential types is offsetting the decline in residential work.
