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‘A Positive Impact’ on CRE Fundamentals

January 15, 2016

Last Updated: January 13, 2016 | By Paul Bubny | GlobeSt

NEW YORK CITY—The outcome of what many see as a pivotal race for the presidency is just one of the factors creating uncertainty in 2016. Among other considerations, there are also questions about the health of the job market and concerns about the impact commercial real estate prices will see from the Federal Reserve’s decision to end its longstanding zero interest rate policy. In spite of these uncertainties, Integra Realty Resources says it remains bullish on commercial property sectors, “because institutionally we understand that while the US economy is changing, the people and economic institutions continue to be innovative and enthusiastic.”

In fact, IRR is predicting “a positive impact” on rents, occupancy and values due to increased job creation. As evidence, IRR’s annual Viewpoint 2016 report cites the continued “robust” pace of cross-border investment into US CRE, currently double the pace of 2005. That pace will be maintained as “home office wealth” continues to migrate family money directly into US real estate investment.

IRR’s report sees tailwinds for all five of the major food groups. Office, for example, is seen as benefiting from broader economic trends, while a dearth of new construction has worked in favor of continued rent growth. Accordingly, IRR predicts that 18.6% of US markets will experience CBD class A value increases of at least 4% this year, compared with 8.5% for CBD class B, 65% for suburban class A and 3.2% for suburban class B.

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Gregory De Jong, CFP, Co-Founder of Paragon Advisors, LLC.
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Blue Vault is just what advisors need to size up the different offerings in the nontraded REIT market. Just as importantly, it’s what the industry needs to encourage best practices among REITs.