December 3, 2018
A U.S. Congress divided in the wake of the 2018 midterm elections is less likely to hinder continued economic growth or dampen demand for commercial real estate, according to an outlook from Transwestern. Two years of anticipated gridlock ease fears that political or economic policy changes will derail business expansion plans, setting the stage for further job creation and modest gross domestic product (GDP) growth of about 2% in 2019.
Most notably, the U.S. industrial market remains red-hot with record-high port volumes, positive absorption and a vacancy rate that remained below 5% in the third quarter, despite the addition of new inventory. Prelease commitments in the sector are offsetting a large percentage of the 376 million square feet of new construction. Robust demand is expected to continue, as employment is trending up in construction, manufacturing, transportation and warehousing, and analysts anticipate a strong holiday shopping season.
While not as stellar as the industrial sector, the office market is enjoying stable vacancy and modest asking rent appreciation nationally. October’s 3.7% jobless rate signaled full employment by historical standards, but Transwestern expects recent retirees and others not counted as unemployed to re-enter the workforce in the coming year. Still, with dim prospects for increased immigration, a labor shortage could begin challenging economic growth by early 2020.
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