The Urban Land Institute (ULI) wrote today about six ongoing trends that will continue to mark the national commercial real estate market in 2016 and maybe beyond. We know the basics and broad strokes of today’s national market already – very low inflation hand-in-hand with very low prime lending rates, improving employment numbers, and predictable demographic migrations as baby boomers and millennials find their new group positions for living and working.
Add to this a rising political uncertainty at all levels from local to national, aggravated by the heightened visibility of the genuine tax and civics postures of localities on social media. When every pothole in every community gets its own social media post, it heightens political acrimony while at the same time affects real estate investment and move-in decisions, perhaps unfairly.
ULI highlighted six enduring trends in a recent Urban Land Magazine piece by Peter Burley and David Lynn. The six of course touch on all the above and more. The top three are:
Global economic uncertainties: “The International Monetary Fund has downgraded global growth twice since January as uncertainties blur the outlook. For U.S. markets—real estate in particular—the impact is likely to be largely positive as U.S. assets become more attractive and valuable to global investors. We can probably expect enhanced inbound foreign investment in U.S. real estate markets as the United States becomes even more of a safe haven for investors worldwide.”
Steady interest rate environment: “We still believe that the Fed is more than likely to weigh the effects of each move it makes before adding any additional friction to current (if unspectacular) economic growth trends.”
Foreign investment in the US: “And, while slowing growth in China and much of Europe may dampen currencies and incomes over there, there is still abundant non-U.S. capital looking for placement and very strong demand for U.S. assets, as 2015 proved with record inflows.”
To read the entire piece with all six factors expected to affect national CRE markets, follow the link to the ULI piece.