Global Market perspective
5 key themes
1. Real estate market momentum slowing
The world economy has moved into a synchronised slowdown and geopolitical issues still abound. This is now filtering through to real estate markets; however, fundamentals remain healthy with momentum only easing gradually.
2. In a low-yield environment real estate still offers value
Returns for private real estate have remained stable during 2019 while public real estate continues to outperform other major asset classes at the global level. Government bond yields have declined further throughout the year, and real estate continues to offer a premium to most other asset classes despite yields being at record lows in many markets. The volume of capital held by funds that is yet to be deployed is near all-time highs and investors, though cautious and selective, remain keen to access the sector.
3. Office supply pipeline to match previous peaks
Office construction activity is anticipated to peak in 2020 at close to 19 million square metres globally, similar to levels at the height of the last two cycles in 2001 and 2008. This will provide greater options for tenants in some of the most supply-constrained markets while gradually pushing up vacancy rates over the next year and leading to slowing rental growth.
4. Demand fuels increasing logistics supply pipeline
E-commerce firms and traditional retailers are participating in a last mile delivery race to get their products to consumers as quickly as possible, putting increased focus on urban logistics. Combined with a preference for the amenities and efficiency offered by newer space, this is translating into new demand and helping to drive record levels of logistics construction activity around the world. Despite the amount of new development, vacancy rates remain level or decreasing as net absorption and pre-leasing rates remain high.
5. The repurposing of retail
Structural changes in the retail sector mean that some retail space is no longer fit for purpose. There is no universal solution for what happens to this obsolete space, with landlords pursuing two main avenues: looking for alternative retail uses including grocery, large box or value retailers, or repurposing space for alternate uses such as co-working, residential or cultural facilities.
Explore Sector Trends
Investment markets pick up during the third quarter
Employee experience comes to the fore
Office leasing volumes healthy but trending downwards
Landlords explore repurposing options as demand becomes more selective
Last mile delivery race fuels demand in logistics markets
Extended growth cycle continues to bolster travel demand
U.S. multi-housing expansion continues
Find out where each market sits within its rental cycle.
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Global Market Perspective, November 2019
JLL's regular view on the impact of economic forces on property markets worldwide. It is a unique combination of updates from professionals on the ground and the insights of our leading research organization.