Due to one of the largest economic expansions in US history, economists predict that 2017 may have been the year of the market’s peak for commercial real estate. There has been some evidence that indicate that the market’s best years are in its past. Numerous factors from past years create uneasiness for what could take place in 2018. Some factors including: a decreasing amount of deals, months of declining commercial property prices and a widening gap between the seller’s asking price and the amount buyers are willing to bid. Although the market has slowed down, it is expected to be on its way to a steady growth. Here is the predictions for the office, multifamily, industrial and retail markets for 2018.
A slow and steady growth is expected from the office market. The job market has decreased from his peak in 2015, but continues to remain strong. It is predicted that the office sector will experience a type of balancing act. Supply and demand will likely meet.
Although the job market remains strong, wage growth has not. If wages continue to lack growth, it is predicted that consumers may lack confidence in their spending. This may impact retail and multifamily markets. However, economists have predicted that the tax laws will create a higher demand for multifamily properties. The new tax laws have taken the away the benefits of home ownership and have made renting the more appealing option.
The industrial sector continues to be the best performer in commercial real estate. Construction of industrial properties have hit a record high due to retailers needing more space for online shipments.
The retail market has taken blow after blow in 2017. Numerous large retail chains have announced store closures throughout the nation. However, there is a softer outlook for retail in 2018. It is a prediction that the US retail sector’s operating income will increase from 3.5% to 4.5% and sales are also predicted to jump by 4.5% as well.