Commercial Investment Real Estate March/April 2018 | Page 10

MARKET
TRENDS
U.S. Cities Showing Strong Momentum
Rank Total Return % MSA
1 19.87 San Francisco
2 17.84 Nashville, Tenn.
3 16.54 Portland, Ore.
4 17.55 Salt Lake City
5 15.02 Hartford, Conn.
6 14.01 Milwaukee
7 17.45 San Antonio
8 16.06 Denver
9 14.17 Jacksonville, Fla.
10 15.15 Oklahoma City
Note: Market rankings for the observation date are based on historic returns from Q3 2014 to Q3 2015, reflecting the
two-quarter lag. Returns listed in the table reflect historic one-year return performance from Q1 2015 to Q1 2016.
Source: CBRE Econometrics Advisors, CBRE Americas Research, Q1 2017
Briefly Noted
Hospitality — Hotel
occupancy is expected to
continue soaring to record
levels of 65.9 percent
nationally through 2019,
marking 10 years of nonstop
growth, according to CBRE.
However, challenges on the
horizon consist of increased
hotel construction in local
markets, low inflation,
the sharing economy,
and book-direct, best-
price guarantees for hotel
rooms. Countering these
headwinds, international
and domestic travel rose
3.8 percent during 2016,
increasing the demand for
hotel rooms and contributing
to the demand outpacing
supply, according to Marcus
& Millichap. Norfolk-Virginia
Beach, Va.; Orlando, Fla.;
and Atlanta experienced
high increases in demand
for hotel rooms.
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March | April 2018
Industrial — Three trends
are spurring growth in the
industrial sector: low, steady
vacancy at 5.2 percent
nationwide; strong pre-
leasing of 54.2 percent; and
the strength of e-commerce,
which commands 25
percent of leasing demand.
The U.S. absorbed nearly
165.6 million square feet of
new industrial properties
YOY, while nearly 221.2 msf
of new inventory is in the
pipeline, according to JLL.
Pressure continues for faster
shipments and lower costs
for consumers, resulting
in companies investing in
locations that are closer to
labor and their customers.
Multifamily — Consistent
good performance is the
mantra of the multifamily
sector for 2018. Yardi Matrix
predicts multifamily will
continue its long run, buoyed
by the strong economy and
job growth; the shift to renting
property by many baby
boomers; and the continued
support by millennials.
Hurricanes Irma and Harvey
helped to readjust the supply
and demand equation for
multifamily, particularly in
Houston.
Office — As large,
multinational companies
spread globally, more firms
will rise from emerging
economies. By 2025, more
than 45 percent of the
Fortune Global 500 will come
from emerging economies,
compared to 5 percent in
1990, according to Cushman
& Wakefield. The technology
sector is creating a new
generation of companies
that could compete in
more diverse locations in
secondary markets, such
as Seoul, South Korea;
Stockholm; and Austin,
Texas. The total revenue
for the tech sector grew
from $600 billion to more
than $6 trillion over three
decades, resulting in a
new crop of firms.
Retail — As retail
continues its marketplace
transition, the top 90 U.S.
shopping centers have
spent billions of dollars to
renovate their space, capti-
vating shoppers with more
food and fun; community
connections; and stronger
curb appeal. More than
41 percent have upgraded
their food and beverage
offerings; 34.4 percent have
renovated tenant space;
and nearly 30 percent
have boosted entertain-
ment, according to JLL.
COMMERCIAL INVESTMENT REAL ESTATE