As we forge ahead into the New Year, several firms are coming out with their opinions on how commercial real estate will fare in 2016. And, although it doesn’t look like the industry will see the same strong growth as it had in recent years, the outlook seems far from negative.
A Marcus & Millichap report’s focus on employment says that both the office and retail sectors in the United States should continue to have strong momentum this year. This is due, in part, to increases in hiring.
The commercial real estate firm also said that both sectors are benefiting from limited supply due to a lack of construction. This is coupled with increased demand, which could push up rents, because both retail and offices are seeing increased job growth. In the case of office, four million workers were hired in these facilities over the past five years; and 2016 is expected to see a continuation of that. Meanwhile, Marcus & Millichap says that retail jobs increased by 274,000 thousand last year, and the expectation is that retail real estate rents will also increase throughout 2016.
On more of a micro level, New Jersey commercial real estate is expected to be strong in the coming year, according to New Jersey Business. The industrial sector is especially hot in the state. The expected expansion of the Panama Canal, is predicted to only up the ante, since there is such a tight occupancy rate in the state, due to a lack of supply.
There is even commercial real estate movement in Alaska. New retailers are looking to expand up North, including Whole Foods, Smashburger and Dick’s Sporting Goods, according to local reports. That is taking place despite lower gas prices, while oil is the lifeblood of that state’s economy. There is also a lot of new construction planned for Anchorage.
Finally, a place that historically has trouble with new development, California, is seeing that turn around, according to an Allen Matkins/UCLA Anderson report. The law firm and university expect it to see an increase in overall commercial real estate construction through next year. Multifamily building around the Bay Area and Los Angeles area is expected to increase with continued serious demand for that product type.
It looks like we could see a Happy New Year in all 50 states. Unless there are serious problems outside the control of the US, such as a complete dive in the Chinese economy, or some crazy international skirmish impacting our economy, commercial real estate should have a strong 2016.