“My outlook is for more of the same. Slow, but steady growth in terms of job growth, absorption, rents. I think industrial will pick up a bit now that at least the ‘phase one’ [of trade agreement] is done. The persistence in the trade war had dragged on the market, more so than the actual trade statistics, which have only fallen in the last nine months or so.

Other than my more favorable view of industrial, I think the apartment market will remain healthy, consistent with 2019 growth. Office could continue to decelerate and retail as well. Office should still be positive, but there is more uncertainty about the retail market. Retail rents are declining in some metros; if more do so—and it’s possible—it could tip the scales at the national level. Non-gateway cities may provide opportunities. There is a number of fast-growing cities—in terms of job growth and population: Reno, Nev., Bend, Ore., Bremerton, Wash., Wilmington, N.C.

The election may cause many to hesitate on decision making. This will slow the overall market— particularly the sales market, which should slow in 2020.”

“We think 2020 is going to be very similar to 2019. The economic conditions are placid, meaning we’re not seeing a rise in inflation, we’re not seeing a rise in interest rates, as a matter of fact there’s probably more pressure downward than upward. While we might see a somewhat slower macro growth environment, it certainly bodes well for commercial real estate acquisitions activity. Overall, the headline answer is we expect 2020 to be similar to 2019, and one positive upside bump is we expect more foreign money because we see a drop in the cost of investing here in the United States.

My most important statistic in real estate is projected office-using job growth, not just job growth, but office-using job growth. So, in those markets that have that strength, you then have a multiplier effect that impacts demand for hotels, for multifamily, for all the other asset types. So, I would go to those markets that have the highest projected office-using job growth and then back into the asset types that are going to outperform in those markets.

Something I’ve been saying a lot now in interviews is don’t get carried away by political headlines. As a matter of fact, see that as an opportunity. People tend to overreact to political headlines. We’ve been studying the outcomes of presidential elections going back 50 years, and whoever sits in the White House doesn’t have nearly as much of an impact as people think. So, people start getting nervous, that’s the time for you to take advantage of that opportunity. Some things that do concern me is what’s been happening in multifamily [regarding] rent control. That’s already caused a modest chilling effect in those markets where we’ve seen rent control come into place.”

“Continued steady, but unremarkable improvement in fundamentals as supply roughly matches demand and modest appreciation in property values, but with notable deviations. Coastal/infill industrial and manufactured housing will continue to shine, while malls will struggle, and lodging will be a challenge.

Non-traditional real estate types continue to demonstrate better performance than old-school core sectors. The public market continues to offer the best avenue for real estate ownership because it is liquid, offers better access to non-core property types with generally better cap-ex needs and supply-demand pictures, and the public market offers better performance and fees. And much stronger balance sheets than in the last cycle. Also, single-family rentals will continue to outpace apartments.

Besides negative retailer trends in the mall business, keep an eye on the magnitude of supply negatively impacting lodging, self-storage, and seniors housing. But the good news is seniors housing should fare better starting in 2021 as supply wanes a bit while demand tailwinds improve.”

“In our Deloitte Commercial Real Estate Outlook for 2020, we surveyed 750 owners and operators of real estate across 10 countries. Our survey respondents have a divergent view, generally, pointing to cautious optimism about how the U.S. commercial real estate industry will perform over the next 18 months: 20 percent were very optimistic, 55 percent were somewhat optimistic, 13 percent were neutral, and 12 percent were somewhat pessimistic.

A solid 73 percent of respondents expect increases in transaction activity. While 56 percent of our surveyed executives anticipate an increase in cost of capital, 67 percent expect more capital availability. Office property respondents are most optimistic about the transaction and capital markets—85 percent and 74 percent believe transaction activity and capital availability will grow, respectively, whereas 26 percent anticipate a decline in the cost of capital. In contrast, hotel property respondents are least optimistic, with 27 percent and 35 percent expecting a decline in transaction activity and capital availability, respectively, and 52 percent expecting an increase in cost of capital.

Several macroeconomic concerns, such as the ultimate impacts of trade disputes, and global macro events, such as Brexit, weigh on what are otherwise positive fundamentals. The commercial real estate industry seems to be on solid footing to attract capital. If there is an economic downturn, the short-to-medium-term challenge is expected to be budgetary pressures weighing against the requirement to make technology investments, which could impact longer-term returns.”

“Right now, there are secular trends pushing against retail and aiding industrial. CoStar’s forecast for next year reflects that, with the best rent growth in industrial and the worst in retail. This is not a new story, but it is an important one. Consumers have voted with their wallets, and retail is changing. Those retailers not able or willing to adapt have already proven casualties in the transition that the industry is going through, which in some cases will mean lower sales per square foot figures, or at least slower growth.  This has gotten passed along to landlords over the course of the cycle, as retail has had the slowest rent growth since 2010. We expect that to continue next year.

The labor drives a large portion of the demand in most property types, whether through office usage or increased consumption. As we enter 2020. the pool of available workers looks fairly tight. Worker participation in the 25-54-year-old cohort is near historical highs, as with 55-64. Sixty-five years+ worker participation is already at historical highs, though it does still likely have room to grow. However, it is unlikely that increasing 65+ worker participation is likely to allow the labor force to grow unrestrained. As a result, the smaller labor pool available may constrain growth in demand for office space as companies find it harder to grow their workforce, for multifamily as household formation will likely slow, and for retail as consumption may slow as less new workers enter the workforce.”

“Overall, the U.S. commercial real estate market is likely to experience moderate growth in 2020. Economic conditions remain favorable to real estate investment, with low interest rates and ongoing job creation. The industrial market is likely to see steady growth, as demand for distribution centers in service of e-commerce remains robust. The office market may see decelerating demand as tenants continue to reduce space requirements, but the construction pipeline remains under control. The multifamily market is benefiting from dual sources of demand: millennials who are not able or willing to enter the for-sale housing market, and seniors seeking to downsize into a more flexible and active environment.

Global economic deceleration and the uncertainty that comes with a presidential election stand out as possible causes of reduced investment in 2020.”