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 | Dec 13, 2016
ABC predicts modest growth for 2017 nonresidential construction sector; warns of vulnerability for contractor
“The U.S. economy continues to expand amid a weak global economy and, despite risks to the construction industry, nonresidential spending should expand 3.5 percent in 2017,” says ABC Chief Economist Anirban Basu.
Market Data | Dec 2, 2016
Nonresidential construction spending gains momentum
Nonresidential spending is now 2.6 percent higher than at the same time one year ago.
Market Data | Nov 30, 2016
Marcum Commercial Construction Index reports industry outlook has shifted; more change expected
Overall nonresidential construction spending in September totaled $690.5 billion, down a slight 0.7 percent from a year earlier.
Industry Research | Nov 30, 2016
Multifamily millennials: Here is what millennial renters want in 2017
It’s all about technology and convenience when it comes to the things millennial renters value most in a multifamily facility.
Market Data | Nov 29, 2016
It’s not just traditional infrastructure that requires investment
A national survey finds strong support for essential community buildings.
Industry Research | Nov 28, 2016
Building America: The Merit Shop Scorecard
ABC releases state rankings on policies affecting construction industry.
Multifamily Housing | Nov 28, 2016
Axiometrics predicts apartment deliveries will peak by mid 2017
New York is projected to lead the nation next year, thanks to construction delays in 2016
Market Data | Nov 22, 2016
Construction activity will slow next year: JLL
Risk, labor, and technology are impacting what gets built.
Market Data | Nov 17, 2016
Architecture Billings Index rebounds after two down months
Decline in new design contracts suggests volatility in design activity to persist.
Market Data | Nov 11, 2016
Brand marketing: Why the B2B world needs to embrace consumers
The relevance of brand recognition has always been debatable in the B2B universe. With notable exceptions like BASF, few manufacturers or industry groups see value in generating top-of-mind awareness for their products and services with consumers.