NAR Report: Commercial Real Estate Is Outpacing The Overall Economy
The outlook on the overall economy is so-so as we approach Q1 2016, but commercial real estate looks poised to do better than other sectors, a NAR report says.
The report, “Commercial Real Estate Outlook 2016 Q1,” projects GDP growth in the first quarter to be moderate, at 1.4%, and to pick up afterwards, reaching 2% by the fourth quarter.
The unemployment rate is projected to hit just 4.8% by the end of 2016, a minor change from the current 4.9%. However commercial real estate “fundamentals are expected to improve,” the report says, with vacancies dropping and employment gains driving demand.
Office vacancies are projected to decline to 13.4% by the end of the year and 12.7% by the end of 2017. Industrial and retail availability are projected to shrink, while multifamily vacancies are projected to rise slightly to an average of 6.5% by the end of 2016.
While the report notes several of the headwinds faced by the broader economy—including weak GDP growth, the strong dollar and uncertainty in financial markets—it predicts the commercial real estate market will remain mostly insulated from those pressures.
“Given the global uncertainty,” the report says, “CRE is likely to remain an attractive alternative,” projecting sales to surpass $560B in 2016.
