Market Data

Market Trends

Urban Technology Changes Work  and Life 

Quantum Computing

  • Timing: 3-5 years 
  • Revolutionizes medicine. n Eliminates supply-chain inefficiencies. 

Artificial Intelligence

  • Timing: 1-10 years 
  • Expands intelligence.
  • Shrinks the job market.
  • Focuses on human creativity  and empathy. 

Internet of Things

  • Timing: 0-10 years 
  • Conserves smart resources.
  • Ensures greater convenience.
  • Uses real estate more intensively.
Source: Cushman & Wakefield
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Europe Rises to the Top

“Globally, the top five investors were Hong Kong, the United States, China, Canada, and Singapore. However,  in addition to being the largest recipient, for the first time in four years, European capital was the greatest source of total cross-border investment, surpassing even North America.”

- Cushman & Wakefield


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Medical Office  Building Forecast

8.5 msf
Construction: New building falls below the previous five-year average for medical office in 2017. The Midwest and Southern regions will lead deliveries this year. Almost 9 msf of space was completed in 2016.

40 basis-point decrease
Vacancy: Absorption is strong in 2017, propelling the overall vacancy rate to  7.6 percent. The rate will stay tightest in the Pacific Northwest, Central Plains, and California regions. In 2016, medical office vacancy declined by 80 basis points.

0.8% increase
Asking Rent: West Coast  regions delivered the highest rents, with several markets well above $30 psf in 2017. The average rent moved up slightly to $23.03 psf nationally. 

Source: Marcus & Millichap 


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Briefly Noted 

Hospitality - The landscape for hotels is changing fast due to geopolitical and economic factors. Also, technological disruption, millennials' cultural expectations, and new market players are causing structural shifts. JLL has identified five groups of cities that provide different opportunities for hotel investors and developers. The five groups consist of Global Giants, with cities such as New York City and London; Rising Giants, including Dubai, United Arab Emirates, and Shanghai; Gateways, with cities such as San Francisco, Singapore, and Sydney; New World Cities, with mid-sized cities like Vancouver, B.C., and Dublin; and Emerging Hotspots, such as Bangalore, India, and Ho Chi Minh City, Vietnam.

Industrial - Demand continues to outpace new supply for industrial properties nationwide, according to JLL. Year-to-date, the U.S. delivered 161 million square feet of new industrial property and absorbed about 165.6 msf. During Q3 2017, nearly 25 percent of the total U.S. leasing demand for industrial came from e-commerce companies. Vacancy rates remain steady at 5.2 percent, and average cost of industrial space was $5.40 psf, an all-time high.

Multifamily - The hurricanes in Florida and Texas have a cost for the multifamily sector; many workers will migrate to those states for rebuilding apartments, resulting in a slower delivery schedule for the rest of the nation. Despite the current long cycle, multifamily continues to show strength, driven by the steady tide of millennials and downsizing baby boomers and the healthy economy, according to Yardi Matrix.

Office - Employers are seeking office locations near public transportation, which offer co-working and flexible office space options, according to Avison Young. Class B buildings often are being renovated to Class A-, while redevelopment continues to turn obsolete buildings into apartments, schools, and self-storage facilities. The U.S. office market is immense - about 5 billion square feet - of which about 3.3 bsf is located in suburban markets.

Retail - As shopping malls reinvent their mix of tenants and use of space, vacancies rose to 8.3 percent in 3Q 2017 compared to 2Q 2017, according to Reis. With more retailers declaring bankruptcy or closures,  this trend will continue. Ten retail companies filed for bankruptcy during the first three quarters in 2017, which is headed toward eclipsing the 20 retail bankruptcies during the 2008 Great Recession, according to AlixPartners. Despite these headwinds, asking rents moved up  0.4 percent, while effective rent rose 0.5 percent,  Reis reports.

CIRE Jan/Feb 2018 Issue Cover

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