april 2019 - hbre
TRANSCRIPT
HBRE, LLC632 FOGG STREET | NASHVILLE, TN | 37203
615-564-4133 | WWW.HBRE.US
April 2019 We hope that you find our monthly newsleer beneficial and relevant. We send this newsleer to our clients and others that are ccommercial real estate owners or work in the commercial real estate industry.
In this month’s newsleer, we discuss 2019 Outlook for Commercial Real Estate. We also review the BiggestVVolume Medical Office Building Markets of 2018.
TThrough our many services we pro-vide, our team shares relevant market informaon with our clients all over the country to help them maximize the value of their commercial proper-es with each phase of ownership. If you are looking to purchase, sell or lease commercial real estate, and would like to speak to a commercial real estate advisor about these or other needs you may have, feel free to reach out to us at hbre.us.
2019 Outlook for Commercial Real EstateThe Commercial Real Estate (CRE) industry experienced its ninth consecuve year of growth as rents and valuaons connued to increase across all sectors of the industry. Many industry experts predict that 2019 will connue to see growth, although at a slower pace.
The Rate of Growth is Slowing Across the CRE sectorsOffice, industrial and mulfamily sectors are expected to experience cconnued growth, albeit at a slower rate than the past few years. However, the retail sector is of most concern to many analysts. The brick-and-mortar retail stores, such as grocery stores, that do not compete as intensely with online retailers, should be fine. However, the big box stores and retailers thatsell other consumer items that have seen market share connue to be lost to internet sales are expected to connue losing ground to online retailers.
Source: Naonal Associaon of Realtors
2019 Outlook for Commercial Real Estate Cont.
Urban Residenal Demand Increasing with MillennialsIn contrast to the suburban-dwelling previous generaons who commute daily from the suburbs to the city for work, this younger generaon of Americans prefer to live, work and play in the city. At an increasing rate over the last several years, the demand among millennials for apartment rental units and condos in urban areas has caused a domino effect for demand of other commercial real estate sectors including office and retail in many urban areas.
TThe Impact of Interest RatesAlthough interest rates have risen over the last year, the Federal Reserve has given signals that it may keepinterest rates steady through the rest of the year. Some analysts think the Federal Reserve may even decrease in the next year, especially if the U.S. slips into a recession. With interest rates sll near historic lows anduncertainty as to when rates may go up again, purchasing commercial real estate and locking in long-term low interest rates could be a wise move for investors.
Effects of Naonal EconomyAAlthough many analysts have been incorrectly predicng a recession to begin for years, the economy overall has remained strong. When a recession finally does come, a light recession that impacts a certain industry or does not reverberate across the enre economy may only cause minor effects to the commercial real estate market. However, a major recession like the one in 2008, could cause massive repercussions across every CRE sector. The impact of a potenal trade war with China or other countries could also affect demand and pricing for com-mercial real estate.
When a correcon does come to the US economy, it is important to be prepared. If you are a CRE owner, keep fundamentals in mind when making decisions on rate renewals and taking on debt and expenses. Preparing for a market of decreased demand for commercial space and resulng lower rates could include keeping compe ve rental rates steady and increasing liquidity levels to prepare for a decrease in income resulng from vacant space.
Let HBRE become a trusted resource for all your commercial real estate needs. Reach out to us at 615-564-4133 or find us online at hbre.us.
Sources: hps://www.globest.com; hps://www.jpmorgan.com/commercial-banking/insights/2019-commercial-real-estate-outlook
HBRE, LLC632 FOGG STREET | NASHVILLE, TN | 37203
615-564-4133 | WWW.HBRE.US
Although the retail sector experienced a surge of transaconal acvity, the price growth for this sector was 2.0% year over year, although current retail pricing has sll not rebounded from the 2007 numbers.
When factoring inflaon, all property types show a 4% growth compared to the 2007 peaks.
2018 US Commercial Real Estate Pricing Growth Down Slightly From Previous Year
Biggest Volume MOB Markets in 2018
Although overall transacon volume for Medical Office Buildings (MOB) was down last year ($11.9 billion) compared to 2017 ($15.8 billion), 2018’s volume was comparable to that of 2016 ($11.7 billion).
Below is a list of the top 5 most acve MOB markets in the US that comprised approximately a third of the overall volume of MOB transacons naonally.
WWW.HBRE.US
Source: Revistamed.com
Most Acve MOB Markets in 2018
Chris Huskey, [email protected]
Allen Bolden, CPA, [email protected]
HBRE wants to become a trusted resource for all your commercial real estate needs. Feel free to reach out to us at 615-564-4133 or connect with us online at
hbre.us/connect.