Commercial Real Estate experts and the National Association of Realtors (NAR) expect the commercial real estate industry to experience a gradual grow this 2016, due to steady job gains and stable leasing demands.
"Historically low interest rates, especially in treasuries, combined with commercial real estate's stable prices and value make this asset an attractive investment," says Ken Riggs, president of Situs RERC. "Looking into 2016, the commercial real estate market should moderate, which could stabilize prices."
The Expectation & Market Realities in Real Estate 2016, a joint report of the National Association of Realtors Situs Real Estate Research Corporation (RERC), along with Deloitte, reported that steady job gains and stable leasing demand is going to help expand commercial real estate activity in 2016, despite the various global and national troubles deterring economic growth. The reports also noted that strong income flows generated from new and existing leases can still benefit investors even with the expected slowdown in commercial property values and price gains.
On the other hand, the apartment sector vacancies are forecasted to increase modestly by the end of the year due to the completion of apartment projects adding to the inventory. However, vacancies for other property types are expected to slightly decline in 2016, according to the press release of NAR in PR NewsWire.
"Supported by solid hiring in most parts of the country, the demand for ownership and rental housing will continue to increase in 2016 despite another year of meager economic expansion," says Lawrence Yun, NAR chief economist. "While supply shortages will weigh on housing affordability and push home prices and rents higher, the housing sector will keep the U.S. economy afloat and lead the residential investment component of GDP growth by up to 10 percent this year."
The Expectation & Market Realities in Real Estate 2016 is an annual report jointly published by the National Association of Realtors Situs Real Estate Research Corporation (RERC), and Deloitte, that draws on the three organizations' respective research and expert analysis and offers an objective outlook on commercial real estate through forecasts and commentary on the current economy, capital markets and commercial real estate property markets.
