Despite the length of this expansionary cycle, the U.S. economic outlook continues to be favorable. With the recent passing of the Tax Cuts and Jobs Act, GDP growth in 2018 is expected to exceed last year’s increases. This is sustaining strong fundamentals, notwithstanding that supply-side pressures remain elevated.
National commercial real estate transaction volumes exceeded expectations in the first quarter of 2018, marking a 4.7 percent increase – boosted by industrial portfolios, multifamily trades, hotel acquisitions and off-market transactions.
That said, for full-year 2018, we expect overall volumes to decline in favor of debt and M&A. Several themes are prevalent for the beginning of 2018, and will continue to define the year:
Core liquidity remains soft, but is expected to improve modestly for gateway markets and best-in-class product.
Aside from investors from Canada, non-domestic buyers have been relatively quiet, but Asian buyers will remain pronounced this year.
The market has seen a resurgence in opportunistic funds closed in the first quarter, already at 80.0 percent of full-year 2017 levels.
With limited capital appreciation expected in the near-term, investors will remain focused on defensive strategies in the U.S. to protect income.
Transaction activity picks up in Q1 and marks an uptick in primary markets despite supply-side risks.
Office investment remains selective, with off-market deals boosting activity.
Industrial sector marks continued, significant growth in investment activity in Q1 2018.
Though transaction momentum continued to slow in 2018, retail investors begin to rebuild confidence.
Exceptional transactions activity in first quarter of 2018 underpinned by acceleration in performance growth.
Net lease transaction volumes in line with broader sector activity; volumes slow by 5.0 percent in first quarter.
View the complete Q1 2018 U.S. Investment Outlook for more on the latest trends for each property sector.
President, Americas Capital Markets
Senior Director, Americas Research
Director, Americas Research