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 | Jun 3, 2016
JLL report: Retail renovation drives construction growth in 2016
Retail construction projects were up nearly 25% year-over-year, and the industrial and office construction sectors fared well, too. Economic uncertainty looms over everything, however.
Market Data | Jun 2, 2016
ABC: Nonresidential construction spending down in April
Lower building material prices, a sluggish U.S. economy, and hesitation among private developers all factor into the 2.1% drop.
Market Data | May 20, 2016
Report: Urban area population growth slows
Older Millennials are looking to buy homes and move away to more affordable suburbs and exurbs.
Market Data | May 17, 2016
Modest growth for AIA’s Architecture Billings Index in April
The American Institute of Architects reported the April ABI score was 50.6, down from the mark of 51.9 in the previous month. This score still reflects an increase in design services.
Market Data | Apr 29, 2016
ABC: Quarterly GDP growth slowest in two years
Bureau of Economic Analysis data indicates that the U.S. output is barely growing and that nonresidential investment is down.
Market Data | Apr 20, 2016
AIA: Architecture Billings Index ends first quarter on upswing
The multi-family residential sector fared the best. The Midwest was the only U.S. region that didn't see an increase in billings.
Building Technology | Apr 11, 2016
A nascent commercial wireless sensor market is poised to ascend in the next decade
Europe and Asia will propel that growth, according to a new report from Navigant.
Industry Research | Apr 7, 2016
CBRE provides latest insight into healthcare real estate investors’ strategies
Survey respondents are targeting smaller acquisitions, at a time when market cap rates are narrowing for different product types.
Market Data | Apr 4, 2016
ABC: Nonresidential spending slip in February no cause for alarm
Spending in the nonresidential sector totaled $690.3 billion on a seasonally adjusted, annualized basis in February. The figure is a step back but still significantly higher than one year ago.
Market Data | Mar 30, 2016
10 trends for commercial real estate: JLL report
The report looks at global threats and opportunities, and how CRE firms are managing their expectations for growth.
