Each quarter, FactRight publishes several commercial real sector outlooks to help keep broker dealers and RIAs informed about the health of each commercial asset type as they assess real-estate related alternative investments for their platforms. These concise overviews provide quarterly insights, statistics, and projections for the various investment sectors, and comment on the biggest trends currently at play within each sector.
Below are top insights from each sector outlook for the second quarter of 2017.
Multifamily Demand Remains Resilient, but Supply is (Still) Rising
While the fundamental drivers supporting multifamily properties are expected to remain healthy and the overall outlook for the sector remains positive, the remainder of 2017 will likely represent the continuation of several moderation trends. Moreover, as moderate oversupply is already somewhat apparent in many major urban core markets, areas with elevated construction activity should be closely monitored for signs of overbuilding going forward. Read the full Multifamily Sector Outlook on FactRight’s Report Center website.
Industrial Continues to be the Strongest Property Type
Industrials are expected to remain one of the top sectors for investment and development prospects for the foreseeable future, with investors focusing on maximizing asset cash flows through rent growth and credit-grade tenancy rather than on further cap rate compression. Furthermore, a strong labor market, rising wages, healthy consumer confidence, and an improving manufacturing sector all bode well for the strength of the industrial sector, as they promote real consumption and thus serve as a catalyst for industrial-related leasing. Read the full Industrial Sector Outlook.
Is Retail Really Dead?
Many believed that the retail sector would be on metaphorical life support by now, but actual retail statistics have changed very little over the past several fiscal quarters and the overall health of the sector remains essentially unchanged. While there has been an undisputed structural shift towards e-commerce, classic brick-and-mortar retail businesses continue to be buoyed by the robust labor market, healthy consumer confidence, and various “repositioning strategies”. To access the full Retail Sector Outlook, please visit FactRight’s Report Center. Read the full Retail Sector Outlook.
Robust Labor Market, but Shrinking Office Footprint
Despite the national economy adding jobs for a record 81-month stretch—absorbing over 16 million workers—businesses are leasing far fewer square feet “per added employee” than in previous real estate cycles. Higher returns and consistent tenant demand in growing suburban markets should create the most attractive yield dynamics going forward, especially for buyers interested in value-add properties. Read the full Office Sector Outlook.
Baby Boomers Spur Growth for Healthcare Real Estate, Millennials Create Change
With over 10,000 Americans turning 65 every day, the number of seniors in the United States is expected to double between 2015 and 2060. This demographic shift, which will increase the 65-age-and-older age segment by 20 million individuals over the next decade, is expected to support long-term demand for a broad spectrum of healthcare services and infrastructure, and markedly boost demand for the senior housing subsector. Additionally, the healthcare industry continues to migrate towards a convenience-oriented, patient-centered, technology-intensive model that is preferred by the millennial generation, which has surpassed the baby boomer generation in size. Read the full Healthcare Sector Outlook.
Positive Travel Trends, Record Occupancy Levels for Hospitality
The stable labor market, heightened confidence amongst businesses and consumers, and positive personal consumption and travel trends are expected to continue to support the hospitality industry throughout the latter half of fiscal year 2017. Longer term, the hospitality industry is expected to benefit from the structural shift in household spending on services and experiences versus goods. Read the full Hospitality Sector Outlook.
