Industry experts expect the new year to be one of slow and steady growth for commercial real estate, and the main advice is to start diversifying your real estate portfolio. Below are more specific developments in various sectors to keep in mind in 2018.
Due largely to the strengthening global economy and likely tax cuts from Washington, the U.S. economy is gaining a new lease on life. Expansion in the property sector has been going on for over 100 months, and by mid-2018, it will be the second longest in U.S. history.
As far as the multifamily sector is concerned, the market will see more construction of apartments that might put downward pressure on occupancy rates and rents. Colliers International Chief Economist Andrew Nelson Colliers reports that economists embracing the new tax law will lead to more demand in the multifamily market: this is because the new system reduced some of the benefits of homeownership, making it less attractive and renting more likely.
Meanwhile, though slightly down from its 2015 peak, job growth for office markets remains robust. Employers added 175,000 jobs on average per month in 2017, compared to 2015’s 250,000. Still, the sector will try to find a fine balance as new supply levels converge with occupancy rates and asking rents.
Lastly, industrial real estate should retain its upward momentum this year with the sector’s record-breaking occupancy and rents. Construction is booming as operators continue to push toward online delivery and get products to consumers more quickly as modern multilevel distribution hubs open in densely populated markets.
Randy Benderson is the president of Benderson Development, a venture his father Nathan Benderson established in New York over 60 years ago. Now carrying the torch of his late father’s legacy, Randy continues to oversee over 8,000 employees and committed to an excellent work ethic and passion for growth. More on the company here.
Randy Benderson 