Commercial Investment Real Estate May/June 2017 - Page 10

MARKET TRENDS How Experiences in Retail Locations Boost Visits Generational Differences Younger Millennials (18-29) Older Millennials (30-34) Free Samples 57% 68% 64% 57% Product Demos 20 19 27 28 Holiday Events 26 22 22 15 In-Store Classes 24 17 14 15 Celebrity Visits 19 22 11 8 Book Signings 14 12 9 8 Retail Experiences Gen-Xers (35-49) Boomers (50-69) Industrial Rents Reach Highest Peak Since 2007* Availability Rate 8.2% Vacancy Rate 4.9% Net Asking Rent $6.58 psf Net Absorption 47.0 msf Completions 44.7 msf Æ È Ç È È * Arrows indicate change from previous quarter Source: CBRE Source: Coldwell Banker Commercial Briefl y Noted Hospitality — The southern U.S. is leading demand for hotel rooms with 2.3 percent growth YOY, with occupancy levels at 60.7 percent in the fourth quarter of 2016. Of all hotel categories, upscale hotels performed the best, rising 5.1 percent YOY in the fourth quarter of 2016, according to CBRE Research. Industrial — The U.S. industrial markets con- tinue to soar and become absorbed at a record- breaking 282.9 msf during 2016, according to Cush- man & Wakefi eld. As of January 2017, the indus- trial sector has recorded 8 May | June 2017 27 consecutive quarters of net occupancy gains, ranking this expansion among the longest cycles ever. “An optimistic U.S. consumer will be a boon to industrial leasing,” says Jason Tolliver, Cushman & Wakefi eld head of industrial research for the Americas. “Containerized traffi c fl ows, manufacturing indices, and business inventories demonstrate that the indus- trial market remains on a promising path.” Multifamily — 2017 will be the biggest year for new supply of apartments since the Great Recession, according to Yardi Matrix. The 320,000 new units will mark a 5.3 percent increase compared to 2016 and could be the peak supply for this cycle. Yet millennials keep driving demand for living in city centers with 18-hour lifestyle and access to public transportation, and 2 million more millennials are arriving every year until their total number reaches nearly 70 million by 2024. 0ffi ce — Despite overall lower investment volume in 2016, the offi ce sector reached $143 billion of full-year transactions, for a slight dip of 0.6 percent compared to 2015, according to JLL. International investors poured $20 billion into offi ce properties for a record 16-percent market share. Investment from Germany topped the list at 19.3 percent, followed by Canada at 12.9 percent, and China at 10.4 percent. Retail — Entertainment and multisensory experiences are the keys to driving millennials to reimagined shopping malls. Commercial real estate professionals can rethink what shoppers experience at malls by reimagining public spaces as a canvas for entertainment, according to McKinsey & Company. COMMERCIAL INVESTMENT REAL ESTATE