Commercial Investment Real Estate July/August 2018 | Page 10

MARKET
TRENDS
1H18 Senior Housing Occupancy
by Property Type
Type Occupancy Change (YOY)
in Basis Points
Continuing Care Retirement Community/
Life Plan Community 91.5% 30 bps
Independent Living 91.3% -20 bps
Assisted Living 88.1% -50 bps
Skilled Nursing 85.3% -80 bps
Source: Marcus & Millichap 1H18 National Seniors Housing Report
Briefly Noted
Hospitality — Heightened
consumer confidence, the
new tax law, and a steady
rise in employment growth
continue to drive hospitality
demand. Supply is rising
steadily, with most hotels
falling in the upscale and
upper-midscale segments.
The bulk of completions are
centered in larger markets,
with the most rooms under
construction in New York
City; Nashville, Tenn.; and
Dallas/Fort Worth, according
to Marcus & Millichap. Pod
hotels designed for price-
conscious millennials, as
well as other new brands,
reflect a realignment in
strategies by hotels to
appeal to a wider audience
of travelers.
Industrial — Vacancies
hit an all-time low across
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July | August 2018
the U.S., as rent growth
outpaced other sectors,
according to Marcus &
Millichap. The expansion
of online shopping has
increased demand for
warehouse, data centers,
and distribution space. The
increased demand also is
propelling a structural shift
in the sector, leading to a
reorganization of space
requirements and property
locations for retailers
and third-party logistics
providers. The demand for
businesses to be closer
to their final customers
is turning many vacated
big boxes into last-mile
fulfillment centers.
Multifamily — The market
remains on track for the
second-highest annual
completions coming in this
year for developers. Fueled
by strong rent growth, low
vacancy, and rising wages,
multifamily is the second
most popular U.S. real
estate sector for foreign
investors, specifically from
Canada and Germany,
according to JLL’s 1Q18
Investment Quick Look
report. An increase in long-
term renters and a limited
inventory of properties for
sale continue to aid growth
in the sector.
Office — Market growth
continues, but at a slower
pace due to higher
completions and the tight
labor market’s impact
on tenant demand. The
U.S. is experiencing the
largest labor shortage in
history, and this is keeping
companies from full
capacity and taking a toll
on commercial real estate,
according to JLL.
Retail — Changing
consumer expectations and
omnichannel retailing are
reshaping retail. Despite
major store closings, U.S.
vacancy rates held steady
at 12.2 percent in 1Q 2018,
according to Statista. The
National Retail Federation
projects 3.8 to 4.4 percent
growth for retail sales in
2018, spurred by increased
consumer confidence,
low unemployment, and
a strong economy. But
with consumers trending
more toward off-price and
discount retail opportunities,
mid-range retailers will
have to seek new ways to
compete with lower-priced
competitors.
COMMERCIAL INVESTMENT REAL ESTATE