ORLANDO, Fla., Nov. 4, 2016 /PRNewswire/ — Sustained by improving job growth and strong demand for multifamily housing, commercial real estate has been steadily recovering in recent years. Looking ahead to 2017, growth is expected to flow into the smaller markets, according to a commercial real estate forecast session today at the 2016 REALTORS® Conference & Expo.
Lawrence Yun, NAR chief economist, and K.C. Conway, senior vice president of credit risk management at SunTrust Bank, expressed confidence that commercial real estate activity should remain on an upward trajectory, but with more uncertainty given the likelihood of a rising interest rate environment in 2017.
Yun explained during his remarks that the commercial real estate sector is on firm ground in spite of the numerous global and domestic headwinds that continue to keep U.S. economic growth in a headlock. He predicts that given the slow growth economic environment, instability overseas and the probability of a rate hike by Federal Reserve at the end of the year, investors are expected to take a cautious approach in the months ahead. He also indicated this would likely lead to a modest decline in commercial property prices, especially in Class A assets in larger markets.
“Prices in smaller markets should continue to climb with strong tenant demand and declining supply supporting growth,” said Yun. “As job creation continues, commercial real estate and vacancy rates will be stable across the country.”