April 16, 2018
NAIOP’s Spring 2018 CRE Sentiment Index reveals commercial real estate respondents believe, as a group, that overall market conditions 12 months from now (spring 2019) will continue to be favorable for the CRE industry. The Index decreased slightly – from 0.49 in September 2017 to 0.46 in March 2018 – reflecting little change in the overall sentiment from six months ago.
The results are fairly consistent with responses posted over the four prior surveys, going back to March 2016, notes NAIOP. That indicates an expectation of continued but slow growth over the next 12 months. This consistent, positive Index level over the past 24 months is a sign that real estate development is not overheating, and should support an extended real estate market expansion for at least 12 more months.
Among the key NAIOP survey findings:
– Respondents almost unanimously agree that the availability of debt and capital will be plentiful over the next 12 months
– The rising cost of construction materials over the next 12 months continues to be a strong concern, though NAIOP points out responses were received before President Trump’s imposed tariffs on aluminum and steel
– Construction labor costs are expected to continue to rise at a greater rate in 2018 than they did in both 2016 and 2017
– Expectations regarding employment growth at CRE companies are the highest they have been since the September 2015 survey.
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