Hospitality — While
U.S. hotel occupancy reached a new record level during 2016, reflecting its
continued rigor, growth is becoming more uncertain in major markets. Houston,
Miami, and New York City have experienced negative growth for hospitality. In
2017 so far, the strongest performers have been secondary markets along the
west coast and Washington, D.C., according to JLL.
Industrial — With
sales growing at a 13 percent clip, e-commerce continues to fuel the industrial
market, according to CBRE. Other drivers include an uptick in home furnishings,
building suppliers, and factory orders overall. Additionally, inventories,
shipments, and consumer confidence continue to rise, which is a good indication
that production, investment, and growth will persist.
Multifamily — The
gap between renters-by-necessity and lifestyle renters has accelerated. As of
March 2017, Yardi Matrix reports the average difference between the segments
has climbed to 180 basis points compared to 80 basis points more gains for RBN
than Lifestyle in November 2016. Markets in the Pacific Northwest led rent
increases: Sacramento, Calif., at 10.1 percent; Seattle at 7.5 percent; and
Portland, Ore., at 6.8 percent. The markets with the lowest increases reflected
a combination of oversaturation, affordability, and a slowing economy. These
markets included Houston at -0.2 percent, San Jose, Calif., at 1.1 percent, and
Washington, D.C., at 2 percent.
Office — The
attraction of urban offices for millennials lifted the office sector out of the
Great Recession, but the suburbs continue to gain market share, according to
Marcus & Millichap. 2017 will mark the high point in construction
completions for the current cycle, adding 82 msf of space, slightly exceeding the
new space developed during 2016. The high absorption rate of 83 msf in 2016
spurred a 20-basis-point decline in the U.S. vacancy rate to 14.3 percent and
will result in an increase for average asking rent of 3.5 percent.
Retail — Cushman
& Wakefield predicts store closures will most likely intensify during 2017.
To achieve growth for traffic in malls, food and entertainment will move from
secondary to primary positions. Inventories for both bricks-and-mortar and
online merchandise has to become the right inventory close to the customers,
which is available to them at the right time. For all retailers, the biggest
hurdle continues to be moving products the last mile for buyers.