January 23, 2019
Global real estate markets are thriving. Despite political headwinds such as trade disputes, Brexit, currency fluctuations and interest-rate hikes, quality real estate continues to be occupied and in demand. Fundamentals continue to show great strength amidst restrained building activity, strong demand and accordant rising rents. Those were a few of the key trends noted in Avison Young’s 2019 North America, Europe and Asia Commercial Real Estate Forecast (video).
Avison Young’s Mark E. Rose says, “While the last few weeks have certainly been a rollercoaster ride for the world’s equity markets, the headline is: we continue to feel very positive about opportunities in the real estate environment for the year ahead.” Rose notes, Avison Young believes more capital is available to move into real estate debt and equity than at any other time. “The next wave of investment is not a matter of if or when – it’s just a matter of price,” yet Rose points out, “Understanding demand is the key to navigating the current market.”
The report notes, an office experience is taking the place of the static workplace of prior generations. Energy, light, collaboration, purpose, sustainability, and health and wellness are as much drivers of the work experience as the underlying businesses.
Industrial is today’s property class of choice, and will probably regress to the mean, but will still be a driving force as methods of production and distribution continue to evolve. Distribution to the home and the last mile are top of mind among industrial owners and occupiers. Accordingly, same- day delivery is the goal of retailers and consumers, as the world’s population continues to increase.
Avison Young’s Earl Webb says, “The U.S. market continued to provide fairly predictable returns to investors in 2018, despite some turbulence, both economically and geopolitically. The strong correlation between job growth and real estate value was again demonstrated in 2018, as the U.S. added more than two million jobs which, in turn, bolstered occupancy levels as well as consumer confidence. Vacancy rates across all property types remain low when compared with historically-similar market cycles. Capital flows into commercial property in 2018 remained roughly equivalent to those of the prior year, and foreign investors continued to be significant investors across all U.S. property types, especially office and industrial.”
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