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Just Released: Viewpoint 2019 Jan 30, 2019

Just Released: Viewpoint 2019

FOR IMMEDIATE RELEASE
2019’s Economy Deserves a Cautious Approach, According to Integra’s Newly Released Viewpoint Report

Annual Report Explores CRE Trends for Across the Nation, With Specialty Property Reports for Caribbean Hospitality, Auto Dealerships, Marijuana and Senior Housing

DENVER, CO— (January 30, 2019) — The post-Recession recovery years have seen unprecedented growth, but there’s plenty of volatility and cause for caution in 2019, according to Integra Realty Resources' (IRR) signature Viewpoint 2019 publication released today. The annual report provides a detailed overview of the local and national commercial real estate market across five key property types: office, multifamily, retail, industrial and hospitality. Viewpoint 2019 also examines trends from the economy, housing, capital markets, interest rates and employment, exploring how these trends will affect commercial real estate markets in the year ahead. This year’s specialty property sector analysis covers the evolving Marijuana Real Estate sector, Senior Housing, Auto Dealerships and Caribbean Hospitality.

“We are proud to bring this highly anticipated report back for its 26th year in production, as it’s an integral part of our clients’ annual business forecasting,” said Anthony M. Graziano, MAI, CRE, Chairman of Integra Realty Resources. “As we leave 2018 with a greater level of uncertainty than which we entered, it’s important to recognize that this increased uncertainty is mostly intangible. Current street conditions and major economic indices signal economic strength, but the market knows that the economy goes where the money flows. Some downside risks may lie ahead. We delve deep into this year’s report to explore data, confidence levels, and a host of other factors impacting the U.S. commercial real estate market.”

The report was produced in partnership with well-known veteran economist, Hugh F. Kelly, PhD, CRE, who added, “Though the middle quarters of 2018 saw a real economic surge, a lot of those gains were left behind by the end of the year. Trade policy and a downward revision in the housing outlook are going to have an industry-wide impact. Add rising interest rates to a flattening employment rate leads us to advise a cautious approach to 2019.”

IRR Viewpoint 2019 Highlights

2019 National Themes

  • The 2017 tax cut legislation, coupled with $779 billion in Federal deficit spending, caused the economy to roar forward in mid-2018. However, that short-term bump didn’t have much pass-through into wages or business fixed-investment. The consensus has growth flattening to 2.6% in 2019.
  • New housing starts are down, with a tightening of labor, lumber and land pushing a ripple effect into an already-softening market.
  • Capital markets are giving off mixed signals. While there is an abundance of investment capital, indices show heightened risk, sending investors into riskier territory.
  • Employment conditions are drastically shifting, where technology is married to labor insufficiency. The job gains enjoyed during recovery may slow, and trendlines require eagle-eyed focus as we move through 2019.
  • Most signs point to market sensitivity, demanding a defensive strategy.

Office

  • There was notable strength in the office sector, with occupancy reported at the highest level since the Great Recession.
  • Rents are rising 2 to 3% annually, with total returns through 3Q 2018 at 6.85%.
  • Income is rising fastest in the U.S. Central and South regions, but appreciation is strongest in the West.
  • As long as markets are on the upswing, investors will be driven by a search for higher yields. No matter the conditions, better buildings in stronger markets will get the most attention, helping to keep average rates stable.

Multifamily

  • There is no one-size-fits all approach to home ownership. With wide demographic appeal and diverse product, capital investment was up 8.6% YOY, with all major regions of the country seeing transaction volume rise.
  • Affordability is a hot topic, with a perceived advantage in lower-density product and increasing interest in older urban properties.
  • 83% of markets are in expansion phase, and only Little Rock, AR, is in recession.
  • Top Markets (ranked by YOY transaction growth rate): 1) Cleveland, OH; 2) Columbus, OH; 3) Memphis, TN; 4) East Bay, CA; 5) Houston, TX.
  • 2019 Outlook: For the most part, apartment markets are healthy and well-aligned with investor sentiment. However, expected weakening of the U.S. economy and employment trends are the challenges to watch.

Retail

  • Retailers continue to be disrupted by ecommerce, along with shifting demographics and consumer spending habits.
  • For all of 2018, volume may have seen a bump above $75 million.
  • All regions of the country are seeing growth, pronounced on both coasts and reasonably strong in the South.
  • Rents are on the rise in San Francisco, Houston and Long Island, NY.
  • Top Markets (ranked by YOY transaction growth rate):  1) San Jose, CA; 2) Baltimore, MD; 3) Manhattan; 4) Los Angeles, CA; 5) San Diego, CA.
  • 2019 Outlook: 38 markets are in the expansion phase while 21 are in recovery. Markets are at or near equilibrium, with community centers leading the way (65.6% in balance) and neighborhood retail markets slightly weaker (59.4% in balance). The effects of the 2017 Tax Cut and Jobs Act remain to be seen; if refunds roll in, confidence will go up, with the opposite possible if additional tax is due.

Industrial

  • Warehousing, distribution, logistics and R&D/Flex properties fuel the 70% of GDP generated by personal consumption expenditures. This makes the enthusiasm surrounding this sector well-placed.
  • From Q3 2017 to Q3 2018, all regions of the country posted gains. Transaction volume was up 13.9% ($82.9 billion) YOY, on pace to set a record for this property type.
  • Four markets are expecting 5% market rent growth: Las Vegas, NV; Northern New Jersey; Houston, TX; and Cleveland, OH.
  • Top Markets (ranked by YOY transaction growth rate): 1) Richmond/Norfolk, VA; 2) San Francisco, CA; 3) Austin, TX; 4) Columbus, MO; 5) Minneapolis, MN.
  • 2019 Outlook: As e-commerce expands, so will its needs. Look for value increases in 88% of markets, but keep a watch on two factors—possible supply and distribution disruption from a tightening tariff policy, and a possibly turbulent 2019 economy.

Hospitality

  • All key drivers (business travel, vacationers, trade show/conference attendance and international tourism) have pushed demand growth. This trend is forecast to continue.
  • 81.3% of markets entered 2019 in the expansion phase, with the highest growth forecast for independent segments (+2.5%) followed by midscale, upper midscale and midscale.
  • Operators are focusing on what Millennials want: experience, authenticity, service/value and product/design.
  • Top Markets (ranked by YOY transaction growth rate): 1) Portland, OR; 2) Palm Beach, FL; 3) San Antonio, TX; 4) Phoenix, AZ; 5) Las Vegas, NV.
  • 2019 Outlook: As of June 2018, 619,000 hotel rooms were under contract in the U.S. New demand will continue to exceed new supply. Strongest market performances are expected in Minneapolis/St.Paul, Miami, Chicago and San Francisco. Cybersecurity is anticipated to emerge as an industry threat.

Specialty Property Reports:

  • Caribbean Hospitality: Some markets are expanding, while those who were hit by the 2017 hurricanes are still suffering low inventory.
  • Healthcare and Senior Housing: Demand is increasing for the foreseeable future.
  • Auto Dealerships: Franchises are priced at near-record levels, but the market is sensitive to wider trends.
  • Marijuana Real Estate Sector: The industry’s validation and evolution will continue with new markets and opportunities, and a swell in employment. 

IRR Viewpoint 2019 can be downloaded for free from IRR's website here. For more information about this year’s report, or to access additional IRR research, please visit www.IRR.com

Click here to watch a short video that details the highlights from this report.

About Integra Realty Resources (IRR)

Integra Realty Resources (IRR) is the largest independent commercial real estate valuation services firm in North America, covering more than 60 markets with over 600 employees throughout the United States, and the Caribbean. The firm specializes in real estate appraisals, feasibility studies, market studies, expert testimony, and related property consulting services. Many of the nation’s largest and most prestigious financial institutions, developers, corporations, law firms, and government agencies are among IRR’s clients. In 2018, IRR completed more than 27,000 assignments across 60 metro markets totaling more than $300 billion in asset value. For more information, visit www.IRR.com

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Each IRR office is led by an MAI-designated Senior Managing Director, industry leaders who have over 25 years, on average, of commercial real estate experience in their local markets.
Integra Offices Map Denver, CO 11049 West 44th Avenue
Suite 101
Wheat Ridge, CO 80033
Phone: 720-833-5930
Fax: 303-951-1924
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Boston, MA 02210
Phone: 617-457-3300
Fax: 617-457-3267
Seattle, WA 600 University Street
Suite 310
Seattle, WA 98101
Phone: 206-903-6700
Fax: 206-623-5731
Portland, OR IRR-Corporate
Portland, OR 97205
Phone: 212-575-2935
Fax: 646-424-1869
Boise, ID RiverWalk Center
1661 W. Shoreline Dr. Suite 200
Boise, ID 83702
Phone: 208-342-2500
Fax: 208-342-2220
Salt Lake City, UT 5107 South 900 East
Suite 200
Salt Lake City, UT 84117
Phone: 801-263-9700
Fax: 801-263-9709
Las Vegas, NV 8367 West Flamingo Road
Suite 100
Las Vegas, NV 89147
Phone: 702-869-0442
Fax: 702-869-0955
Phoenix, AZ 5225 North Central Ave.
Suite 235
Phoenix, AZ 85012
Phone: 602-266-5599
Fax: 602-266-1515
Sacramento, CA 3825 Atherton Road
Suite 500
Rocklin, CA 95765
Phone: 916-435-3883
Fax: 916-435-4774
San Francisco, CA 315 Montgomery Street
9th Floor
San Francisco, CA 94104
Phone: 415-715-4690
Fax: 916-435-4774
Metro LA 16030 Ventura Boulevard
Suite 620
Encino, CA 91436-4473
Phone: 818-290-5400
Fax: 818-290-5401
Los Angeles, CA 16030 Ventura Boulevard
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Encino, CA 91436-4473
Phone: 818-290-5400
Fax: 818-290-5401
Orange County, CA IRR-Corporate
Laguna Hills, CA 92653
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Fax: 646-424-1869
San Diego, CA Cornerstone Professional Center
2775 Via De La Valle, Suite 206
Del Mar, CA 92014
Phone: 858-259-4900
Fax: 858-259-4910
Miami, FL 9155 S. Dadeland Boulevard
Suite 1208
Miami, FL 33156
Phone: 305-670-0001
Fax: 305-670-2276
Naples, FL 2770 Horseshoe Drive S
Suite 3
Naples, FL 34104
Phone: 239-643-6888
Fax: 239-643-6871
Tampa, FL 550 North Reo Street
Suite 220
Tampa, FL 33609
Phone: 813-287-1000
Fax: 813-281-0681
Orlando, FL 326 North Magnolia Avenue
Orlando, FL 32801-2431
Phone: 407-843-3377
Fax: 407-841-3823
Jacksonville, FL IRR-Corporate
Jacksonville, FL 32217
Phone: 212-575-2935
Fax: 646-424-1869
Charleston, SC 11-C Isabella Street
Charleston, SC 29403
Phone: 843-718-2125
Fax: 843-718-2058
Atlanta, GA 5256 Peachtree Road
Suite 115
Atlanta, GA 30341
Phone: 404-418-4358
Fax: 404-418-4357
Birmingham, AL 880 Montclair Road
Suite 275
Birmingham, AL 35213
Phone: 205-949-5995
Fax: 205-271-2389
Jackson, MS 617 Renaissance Way
Suite 100
Ridgeland, MS 39157
Phone: 601-714-1665
Fax: 601-500-5314
Dallas, TX 1100 Mira Vista Blvd.
Suite 300
Plano, TX 75093
Phone: 972-881-7191
Fax: 972-733-1403
Fort Worth, TX 7080 Camp Bowie Boulevard
Fort Worth, TX 76116
Phone: 817-763-8000
Fax: 817-763-8017
Austin, TX 401 Congress Avenue
Suite 1540
Austin, TX 78701
Phone: 512-924-1345
Memphis, TN 1661 International Drive
Suite 330
Memphis, TN 38120
Phone: 901-322-1701
Fax: 901-767-4918
Tulsa, OK IRR-Corporate
Tulsa, OK 74136
Phone: 212-575-2935
Fax: 646-424-1869
Kansas City, MO/KS IRR-Corporate
Westwood, KS 66205
Phone: 212-575-2935
Fax: 646-424-1869
Providence, RI 365 Eddy Street
Providence, RI 02903
Phone: 401-273-7710
Fax: 401-273-7410
Syracuse, NY 120 East Washington Street
Suite 525
Syracuse, NY 13202
Phone: 315-422-5577
Fax: 315-422-5295
Hartford, CT 97 Broad Street
Middletown, CT 06457
Phone: 860-291-8997
Fax: 401-273-7410
New York, NY IRR-Corporate
New York, NY 10036
Phone: 212-575-2935
Fax: 646-424-1869
Northern New Jersey 301 South Livingston Avenue
Suite 104
Livingston, NJ 07039
Phone: 973-422-9800
Fax: 973-422-9797
Coastal New Jersey 1415 Hooper Ave.
Suite 306
Toms River, NJ 08753
Phone: 732-244-7000
Fax: 732-505-9498
Philadelphia, PA 995 Old Eagle School Road
Suite 307
Wayne, PA 19087
Phone: 610-238-0238
Wilmington, DE IRR-Corporate
Wilmington, DE 19805
Phone: 212-575-2935
Fax: 646-424-1869
Baltimore, MD The Yards
700 Pennsylvania Ave, SE, Suite 200
Washington, DC 20003
Phone: 202-601-4146
Fax: 646-424-1869
Washington, DC The Yards
700 Pennsylvania Ave, SE, Suite 200
Washington, DC 20003
Phone: 202-601-4146
Fax: 646-424-1869
Pittsburgh, PA 3535 Boulevard of the Allies
Pittsburgh, PA 15213
Phone: 412-683-2211
Fax: 412-683-2220
Cleveland, OH 850 Euclid Ave.
Suite 952
Cleveland, OH 44114
Phone: 330-659-3640
Fax: 330-659-3640
Columbus, OH 6241 Riverside Drive
Dublin, OH 43017
Phone: 614-764-8040
Fax: 614-764-8050
Saint Louis, MO 16759 Main Street
Suite 209
St. Louis, MO 63040
Phone: 636-530-0009
Fax: 636-530-0046
Chicago, IL 400 E Randolph St.
Suite 715
Chicago, IL 60601
Phone: 312-565-0977
Fax: 312-565-3436
Minneapolis, MN 8012 Old Cedar Avenue South
Minneapolis, MN 55425
Phone: 612-339-7700
Fax: 612-339-7937
Nashville, TN 1894 General George Patton Drive
Suite 300
Franklin, TN 37067
Phone: 615-628-8275
Fax: 615-628-8286
Richmond, VA 7110 Forest Avenue
Suite 202
Richmond, VA 23226
Phone: 804-346-2600
Fax: 804-747-9140
Greensboro, NC 5411-A Friendly Avenue
Greensboro, NC 27410
Phone: 336-676-6033
Fax: 336-676-6025
Raleigh, NC 8382 Six Forks Road
Suite 200
Raleigh, NC 27615
Phone: 919-847-1717
Fax: 919-847-1714
Charlotte, NC 214 W. Tremont Ave.
Suite 200
Charlotte, NC 28203
Phone: 704-376-0295
Fax: 704-342-3704
Columbia, SC 500 Lawand Drive
2nd Floor
Columbia, SC 29210
Phone: 803-772-8282
Fax: 803-772-0087
Cincinnati/Dayton, OH 8241 Cornell Road
Suite 210
Cincinnati, OH 45249
Phone: 513-561-2305
Fax: 513-561-2881
Detroit, MI 400 W. Maple Road
Suite 100
Birmingham, MI 48009
Phone: 248-540-0040
Fax: 248-540-8239
Indianapolis, IN 4981 North Franklin Road
Indianapolis, IN 46226
Phone: 317-546-4720
Fax: 317-546-1407
Louisville, KY 13000 Equity Place
Suite 105
Louisville, KY 40223-3976
Phone: 502-452-1543
Fax: 502-451-3657
Caribbean Cayman Business Park #A5, P.O. Box 751
Grand Cayman, Cayman islands
Camana Bay, KY KY1-9006
Phone: 844-952-7304
Houston, TX 9225 Katy Freeway
Suite 206
Houston, TX 77024
Phone: 713-973-0212
Fax: 713-973-2028
San Antonio, TX 909 NE Loop 410
Suite 636
San Antonio, TX 78209
Phone: 210-446-4444
Puerto Rico 508 Asuncion St.
Puerto Nuevo Development
San Juan, PR 00920
Phone: 844-952-7304
New Orleans, LA 643 Magazine Street
Suite 330
New Orleans, LA 70130
Phone: 504-291-9019
Little Rock, AR 8201 Ranch Boulevard
Building B1, Office 6
Little Rock, AR 72223
Phone: 501-476-5561