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 | Jul 17, 2019
Design services demand stalled in June
Project inquiry gains hit a 10-year low.
Market Data | Jul 16, 2019
ABC’s Construction Backlog Indicator increases modestly in May
The Construction Backlog Indicator expanded to 8.9 months in May 2019.
K-12 Schools | Jul 15, 2019
Summer assignments: 2019 K-12 school construction costs
Using RSMeans data from Gordian, here are the most recent costs per square foot for K-12 school buildings in 10 cities across the U.S.
Market Data | Jul 12, 2019
Construction input prices plummet in June
This is the first time in nearly three years that input prices have fallen on a year-over-year basis.
Market Data | Jul 1, 2019
Nonresidential construction spending slips modestly in May
Among the 16 nonresidential construction spending categories tracked by the Census Bureau, five experienced increases in monthly spending.
Market Data | Jul 1, 2019
Almost 60% of the U.S. construction project pipeline value is concentrated in 10 major states
With a total of 1,302 projects worth $524.6 billion, California has both the largest number and value of projects in the U.S. construction project pipeline.
Market Data | Jun 21, 2019
Architecture billings remain flat
AIA’s Architecture Billings Index (ABI) score for May showed a small increase in design services at 50.2.
Market Data | Jun 19, 2019
Number of U.S. architects continues to rise
New data from NCARB reveals that the number of architects continues to increase.
Market Data | Jun 12, 2019
Construction input prices see slight increase in May
Among the 11 subcategories, six saw prices fall last month, with the largest decreases in natural gas.
Market Data | Jun 3, 2019
Nonresidential construction spending up 6.4% year over year in April
Among the 16 sectors tracked by the U.S. Census Bureau, nine experienced an increase in monthly spending, led by water supply and highway and street.
