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IRR: Approach Commercial Real Estate with Caution in 2019

After two slightly depressed years, 2018 represented a record volume for commercial real estate transactions in the United States. Source: Integra Realty Resources

DENVER — The post-Great 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) Viewpoint 2019 publication. 

The annual report provides national and market-by-market overviews across five property types: office, multifamily, retail, industrial and hospitality. Viewpoint 2019 also examines trends from the U.S. economy, housing, capital markets, interest rates and employment, specifically as it relates to commercial real estate. 

“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,” says Anthony Graziano, chairman of IRR. “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.”

The report was produced in partnership with well-known veteran economist Hugh Kelly, who adds, “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.”

Reasons for caution include the 2017 Tax Cuts and Jobs Act having little long-term impact on wages or business fixed investment; a slowdown of new housing starts combined with tighter labor, construction materials and land markets; and overall market sensitivity, suggesting a defensive strategy is wise.

The report features separate analyses by commercial real estate sector, as well as special property reports on Caribbean hospitality, healthcare and seniors housing, auto dealerships and marijuana real estate. To view the full IRR Viewpoint 2019 report, click here

Based in Denver, Integra Realty Resources is an independent commercial real estate valuation services firm, 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.

— Jeff Shaw

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