By nearly every relevant metric, the economic backdrop pertaining to the property markets is in excellent shape. Real GDP growth has averaged approximately 2% per annum throughout most of this 9-year expansion, but it cranked up to over 4% in the second quarter of 2018, and the momentum will likely continue through this year and well into next. Helping to bolster growth are massive tax cuts and government spending increases. The labor markets are also humming along, continuing to demonstrate strength beyond their years.
Office: A strong wave of office development is hitting in 2018—70 msf—creating downward pressure on effective rents in certain markets.
Industrial: Continues to boom. Net absorption forecast to surpass 250 msf in 2018 and remain well above 200 msf in 2019/2020.
Retail: Secular shifts continue, but certain pockets of retail continue to thrive. Overall vacancy set to rise from 6.6% in 2018 to 6.8% in 2020.
Capital Markets: Record levels of dry powder are aimed at North American commercial properties. As of August 2018, there was $186 billion targeting assets by closed-end funds.