For the commercial real estate industry, important economic metrics which impact the market’s underlying fundamentals, include GDP growth and job creation. While both of these metrics have been trending positively, they have not been performing at the level economic text books would predict based upon the magnitude of the Great Recession. Those books teach that economic cycles typically act like a rubber band. The more they are stretched in one direction, the more they should correct in the opposite direction.
Given the severity of the recession, predictions of annual GDP growth of 6 percent to 7 percent were common and estimates of job growth of at least several hundred thousand jobs per month were being equally tendered. Our recovery has been much more modest. But even with these less than thrilling improvements, the commercial real estate market, particularly in gateway cities, has recovered extraordinarily well. If you have read some of my recent columns, you know that I believe 2014 was, by far, the best year for investment sales in the 31 years I have been an active broker. Leasing data is very positive and expectations are that 2015 should be an excellent year for rental growth in all sectors, office, retail and residential. Read More