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Just Released: Viewpoint 2020 Jan 29, 2020

Just Released: Viewpoint 2020

FOR IMMEDIATE RELEASE
2020’s Economy is One of Mixed Signals and Cautious Optimism, 
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 29, 2020) — Most of the economic buzz heading into the new decade revolves around a possible recession and signs of a slowdown, but there are market segments on the rise, according to Integra Realty Resources (IRR) signature Viewpoint 2020 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 2020 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 Caribbean Hospitality, Healthcare and Senior Housing, and the maturing Marijuana Real Estate segment.

Addressing the subject on most market-watcher’s minds, Anthony M. Graziano, MAI, CRE, Chairman and CEO of Integra Realty Resources, is reluctant to speak in certainties when it comes to the timing of a possible recession. Citing the probability data from Comerica Bank, he notes, “there’s a 50% chance that everything in 2020 will be just fine.” He adds, “In the short-term, key market fundamentals including, historically low unemployment, gains in existing home sales, low mortgage rates, and improving incomes, are warding off a recession. I’m optimistic the sun will remain shining in 2020. Nevertheless, I’m bringing an umbrella.”

As in previous years, this highly anticipated report was produced in partnership with well-known veteran commercial real estate economist, Hugh F. Kelly, PhD, CRE, who is provisionally naming this next period in our economy as “the decade of deceleration.” A deeper look at demographics, GDP, strengths and challenges show a mixed outlook. And he concludes that interdependence—and the realization of it—will determine how well the economy withstands any pressures.

IRR Viewpoint 2020 Highlights (Click here to watch a video detailing these highlights)

2020 National Themes

  • The Congressional Budget Office has pegged the entire decade of the 2020s as a period where GDP growth will average just 1.5%.
  • U.S. business investment growth is expected to drop from 2019’s 2.2% increase to a sluggish 1.1% in 2020.
  • Consumer confidence is still high, buoyed by decades-low unemployment and a strong stock market.
  • Reacting to the mid-2019 inverted yield curve, the Federal Reserve lowered interest rates three times between July and October, strengthening the economy heading into 2020.
  • The markets must acknowledge a sharply slower long-term rate of growth and price accordingly.

Office

  • The shift of work from blue-collar to gig-economy jobs has changed how space is built, adapted, and used.
  • In keeping with a wider deceleration narrative, the survey has revealed lower levels of inflation in both rents and expenses.
  • The majority of markets are still considered to be in the Expansion phase, with only five of 52 reviewed markets in Recession or Hypersupply.
  • Investment volume was strongest in the East and West, flat in the South, and down in the Central region.

Multifamily

  • With mid-market and affordable housing in short supply, and 35% of U.S. households in the renter pool, rental market growth shows reasons for optimism.
  • Investor activity is exploding in the South and West, especially in Atlanta, Dallas, and Phoenix.
  • The overwhelming majority of markets are in the Expansion phase.
  • Suburban markets look especially strong.
  • The 2020 flow of funds is expected to continue at a high level.

Retail

  • Specialization is the key to identifying opportunities, with neighborhood and community centers, especially those anchored by grocery and drugstore chains, deserving of a closer look.
  • Employment growth seems to be the factor keeping some 53% of U.S. metros in the Expansion phase.
  • The continued rise of e-commerce is still the segment’s greatest disruptor, growing its share to 16.2% by 2023.
  • 55% of all retail sales for the next four years will be Internet-based.
  • Of the top 20 buyers, eight were REITs. Of the top 20 sellers, REITs numbered seven.

Industrial

  • Industrials are one segment still roaring ahead, spurred by the strength of its status as “the back end of the Internet.”
  • Industrial property investment rose 30.5% for the year ended Q3 2019, with every region participating in the rise.
  • Virtually all markets, save Syracuse, NY, and Wilmington, DE, are in Expansion.
  • Flex market in Las Vegas, NV, Northern New Jersey, and Cleveland, OH could find rents rising more than 5% in 2020.
  • In 2020, 88% of warehouse markets expect increasing valuation, led by Orange County, CA, and Portland, OR. 

Hospitality

  • After a 115-month expansion cycle, turbulence is on the horizon.
  • Demand growth is a lackluster 1.2%, while supply has increased by 2%, putting downward pressure on room rates.
  • Millennials are still dominating travel demographics, with an affinity for technology and higher hotel service expectations.
  • Through Q3 2019, the South led all markets with $14.2 billion in sales, followed by the West at $12.1 billion, the East at $10.6 billion, and the Central at $3.7 billion.
  • Modular construction is gaining traction in the U.S., with quicker time-to-market and a higher-quality product. Marriott will open its 32nd modular hotel in NYC in 2020. At 26 stories and costing $26 million, it will be the tallest of its kind.

Specialty Property Reports:

  • Caribbean Hospitality: The destinations reporting largest increases in stayover arrivals were those most impacted by the 2017 hurricanes. Arrivals to the region are expected to grow, with hotel performance demonstrating increasing revenues despite flat occupancy rates.
  • Healthcare and Senior Housing:  The Baby Boomers haven’t fully arrived, but their looming shadow signals in increase in demand for housing, skilled nursing, and hospitals.
  • Marijuana Real Estate Sector:  As the industry matures, it is clear that each business requires responsible stewardship in a growing regulatory framework, and potential investors must look closely at their prospects.

IRR Viewpoint 2020 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

Download these other Viewpoint 2020-related resources:

You can also request to have a FREE hardcopy of Viewpoint 2020 be mailed to you.

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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 575 Union Blvd.
Suite 209
Lakewood, CO 80228
Phone: 720-833-5930
Fax: 303-951-1924
Boston, MA 303 Congress Street
5th Floor
Boston, MA 02210
Phone: 617-457-3300
Fax: 617-457-3267
Seattle, WA 600 University Street
Suite 310
Seattle, WA 98101
Phone: 206-436-1179
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 200
Las Vegas, NV 89147
Phone: 702-869-0442
Fax: 702-869-0955
Phoenix, AZ 2999 N. 44th Street
Suite 512
Phoenix, AZ 85018
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 555 Meridian Avenue
Suite C
San Jose, CA 95126
Phone: 408-299-0444
Fax: 408-299-0449
Los Angeles, CA 16030 Ventura Boulevard
Suite 620
Encino, CA 91436-4473
Phone: 818-290-5400
Fax: 818-290-5401
Orange County, CA 2151 Michelson Drive
Suite 205
Irvine, CA 92612
Phone: 949-591-8150
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
Kansas City, MO 1100 Main Street
Suite 400
Kansas City, MO 64105
Phone: 816-652-0222
Fax: 636-530-0046
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
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 6233 Riverside Drive
Suite 2N
Dublin, OH 43017
Phone: 614-764-8040
Fax: 614-764-8050
Saint Louis, MO 16759 Main Street
Suite 209
St. Louis, MO 63040
Phone: 636-898-6533
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 10010 San Pedro Avenue
Suite 220
San Antonio, TX 78216
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 301
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
Grand Rapids, MI 1009 44th Street, SW
Suite 107
Grand Rapids, MI 49509
Phone: 616-261-5000
Fax: 616-261-5045
Lubbock, TX 6309 Indiana Avenue
Suite D
Lubbock, TX 79413
Phone: 806-368-8063
Rio Grande Valley 1601 West Trenton
Suite L108
Edinburg, TX 78539
Phone: 956-878-3577
Northwest Arkansas 200 W. Center Street
Suite #4
Fayetteville, AR 72701
Phone: 479-326-8066