Reflecting what might be described as restrained optimism, the latest Urban Land Institute (ULI) Real Estate Consensus Forecast, just released by The CoStar Group, sees a more modest rate of growth among commercial real estate (CRE) transactions from the frenzied pace seen in recent years.
The forecast, based on a survey last month of 53 real estate industry economists and analysts representing 39 real estate organizations in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – sees continued growth in CRE fundamentals but at a more muted pace over the next three years.
While respondents were more optimistic compared with the previous ULI consensus survey in October about the performance of the warehouse and industrial sector of U.S. and Philadelphia commercial real estate properties, they were less bullish on the apartment, retail and office sectors compared with six months ago.
“The results reflect a certain lowering of expectations for the next three years relative to recent years,” said Anita Kramer, senior vice president, ULI Center for Capital Markets and Real Estate, in relation to the U.S. and Philadelphia commercial real estate markets, “but growth is still positive and – in several cases – better than long-term averages.”
This CoStar report on national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
While job and income growth are expected to remain positive for national and Philadelphia commercial real estate listings in coming years, forecasters were reluctant to upgrade real estate fundamentals or returns, said survey participant William Maher, director of North American strategy and research at LaSalle Investment Management.
Total CRE sales transaction volume is expected to continue stepping down from the record $547 billion in annual transaction volume achieved in 2015, and is projected to drop another 8 percent this year from 2016’s $489 billion total sales volume.
Respondents to this survey on the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – said they expected total sales to hold steady at $450 billion in 2018 before dipping to $430 billion in 2019.
With the prices of U.S. and Philadelphia commercial real estate listings are projected to grow at subdued rates in the next three years, total institutional-grade real estate assets are expected to provide average returns of 7 percent this year, dipping to 6 percent in both 2018 and 2019.
For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Lee Fein (lee.fein@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.
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