NEW YORK – Feb. 5, 2019. Situs RERC, Deloitte and the National Association of REALTORS® announce the release of their annual forecast report: Expectations & Market Realities in Real Estate 2019 – Uncharted Territory. This report reviews 2018 CRE trends in the economy, capital markets, residential and commercial real estate (CRE) markets, and provides our joint predictions for real estate in 2019.
Among our major findings:
• With the US economy on the cusp of its longest expansion in history, the CRE market is expected to perform reasonably well in 2019.
• Favorable economic conditions, including historic employment gains, are expected to allow room for rent growth in many property sectors. This is despite uncertainty about how long the expansion can last.
• Prices are inflated in many markets, including CRE markets, but the underlying confidence on value of CRE generally supports the prices being paid today.
• The industrial sector will likely have the most favorable near-term fundamentals, with the boom in e-commerce fueling demand.
The Expectations & Market Realities in Real Estate report is built on knowledgeable insights from the recognized real estate authorities of Situs RERC, the National Association of REALTORS® (NAR) and Deloitte with experience across all property types worldwide. Collectively, the three firms operate in 50 countries around the globe and employ thousands of real estate professionals.
Ken Riggs, President of Situs RERC, says, “Investors are traveling into uncharted territory as the US economy’s expansion approaches its 10-year anniversary in July 2019, which would break the record for the longest economic expansion. There is no guarantee that we will pass the milestone; there are potential disruptors for the economy – global geopolitical turmoil and anticipated increases in interest rates. The good news for CRE investors is that solid property fundamentals are underlying strong valuations.”
“With pricing gains now slowing to more of a measured pace, and net operating income continuing on pace with a slow level of growth, CRE will rely on income to drive total returns moving forward versus price appreciation. This is especially true of the gateway cities and major core assets. All property types seem to be holding their own as we enter uncharted territory – even retail, which has been challenged in recent years to adjust to the rise in e-commerce,” adds Matt Kimmel, Principal at Deloitte Transactions and Business Analytics LLP.
“Backed by continued strength in the labor market, the outlook for the CRE sector remains strong in 2019,” states George Ratiu, NAR Director, Housing & Commercial Research. “Low unemployment is expected to push wage growth higher, which in turn is expected to ramp up consumer spending and elevate demand for both renting and buying real estate. However, rising mortgage rates pose a threat to housing affordability this year, and may exert pressure on single-family home prices.”
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Notes to Editors
About Situs and Situs RERC
Since 1931, Situs RERC, a wholly owned subsidiary of Situs, has partnered with clients to provide the commercial real estate industry’s most comprehensive valuation advisory services. With the deepest bench of senior-level professionals, the industry’s most reliable data set and best-in-class technology solutions, we provide our clients the third-party, objective insights they need to understand the value of their assets and deliver on their business goals. Situs RERC is headquartered in Houston, Texas, and has offices throughout the US and Europe.
Situs (www.situs.com) is a global provider of strategic business and technology solutions to the real estate and finance industries. Situs has been involved in more than $1 trillion of real estate debt and equity deals across the U.S., Europe, and Asia, and has acquired a number of platforms. In 2012, Situs acquired Deutsche Bank’s European Servicing operations; in 2016, Situs acquired Hatfield & Phillips, the largest non-performing loan and CMBS Special Servicer in Europe. With these two acquisitions, Situs has become the largest third-party loan servicer in Europe. Situs’ acquisition in 2017 of The Collingwood Group, a Washington, DC, advisory firm focused on residential housing finance, expanded Situs’ offer in the residential market, and Situs was further bolstered by the 2018 acquisition of MountainView Financial Solutions, an industry-leading valuation and risk analytics business for the financial services sector.
Deloitte provides industry-leading audit, consulting, tax and advisory services to many of the world’s most admired brands, including nearly 90 percent of the Fortune 500 and more than 5,000 private and middle market companies. Our people work across the industry sectors that drive and shape today’s marketplace to make an impact that matters — delivering measurable and lasting results that help reinforce public trust in our capital markets, inspire clients to see challenges as opportunities to transform and thrive, and help lead the way toward a stronger economy and a healthy society. Deloitte is proud to be part of the largest global professional services network serving our clients in the markets that are most important to them.
About the NATIONAL ASSOCIATION OF REALTORS®
The NATIONAL ASSOCIATION of REALTORS® is America’s largest trade association, representing 1.3 million members involved in all aspects of the residential and commercial real estate industries. NAR membership includes brokers, salespeople, property managers, appraisers, counselors and others. Approximately 80,000 REALTORS® and Institute Affiliate members specialize in commercial brokerage and related services, and an additional 232,000 members offer commercial real estate services as a secondary business. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the NATIONAL ASSOCIATION of REALTORS® and subscribes to its strict Code of Ethics. Working for America’s property owners, the National Association provides a facility for professional development, research and exchange of information among its members and to the public and government for the purpose of preserving the free enterprise system and the right to own real property.