The commercial real estate industry had yet another year of widespread growth in 2018, with a strong economy encouraging near-record sales levels. But the economy moves in cycles, and most are predicting a slowdown within the next few years that could affect the CRE industry.
Despite these likely future economic shifts, there are still many reasons why you can be optimistic about your business’s growth in 2019, including high property values and steady interest rates.
Reports show commercial property values reaching impressive levels.
The value of commercial properties increased 15% from 2017 to 2018, which was just $8 billion short of the $569.9 billion sales record in 2015, according to research firm Real Capital Analytics.
And this year, February’s RCA 2019 report showed commercial property prices rose 6.3% year-over-year for the month, with industrial and apartment indexes both growing over 8% year-over-year. The retail sector also posted the strongest level of annual growth that it had seen in more than two years at 2.9%.
The Fed will leave interest rates alone in 2019.
The Federal Reserve recently announced that it would not hike interest rates in 2019. Federal Reserve Chairman Jerome Powell also expressed a firm confidence that the U.S. economy should “see a favorable outlook this year.”
This is good news for the CRE industry—borrowers will feel more comfortable taking loans with steady interest rates to invest in new properties.
Brokers are confident in the future of their businesses.
The results of our 2018 DNA of #CRE Broker Survey showed that brokers are optimistic about the possibility of growth in their businesses this year. Forty-five percent of brokers surveyed believed industry commission would increase in 2019, and 37% believed it would stay the same.
Brokers also showed confidence through expected team growth. Half of the brokers we surveyed said they think industry staffing needs will grow in 2019 and there will be more brokers in 2019 over 2018.
So, even if the economy begins to slow, the CRE industry has the strength to keep growing.
Continue to follow our blog for more insights on CRE industry news, technology, and marketing. You can also check out the DNA of #CRE Broker Survey results infographic to learn more about what brokers expect from the industry this year.