Steve Francis
Director, GRS | Title
(804) 486-9465
[email protected]
The presidential election might have changed this perspective a bit, but the economy is not going to plunge commercial real estate, according to speakers at the recent Virginia Commonwealth University (VCU) Real Estate Trends Conference.
The keynote speaker, Hessam Nadji, the president and CEO of Marcus & Millichap, said that retail spending, for example, is 25-percent higher than it was in 2007. That shows consumer confidence has been on the upswing for quite a long time.
The country has also been improving overall economically in the past seven years, which is one of the longest stretches on record. Additionally, job growth has been at 11 percent over this time period, and the highest average recorded is at 16 percent. All of this happened after seven-million jobs were lost during the Great Recession. A lot of this has to do with large companies tightening their belts and increasing their profits and productivity.
On the multifamily front, hundreds of thousands of apartment units have been constructed during that period, Nadji said. The single-family industry is also seeing improvement, with home prices in the Mid-Atlantic region increasing, as well as other locales.
The office sector is also doing better as a result of the improving economy, and there is more space getting leased up as a result. Industrial assets are bumped up in several metro areas, due to the major rise in consumer spending on ecommerce products.
There is probably going to be a lot of confusion as to how things will happen with the world economy as a result of the election. But commercial real estate has been on a very good run lately, and hopefully the international community will still pour money into the United States as a safe-haven for investments, due to its long-term stability compared to the rest of the world’s economy.
This remains uncertain, but hopefully there will be continued optimism in the industry.
Nadji said that despite the election results, there will be little impact on our economy and the overall CRE industry, and it will be nothing like the damage we saw in 2008.