Briefly Noted
Hospitality — Hotel occupancy is expected to continue
soaring to record levels of 65.9 percent nationally through 2019, marking 10 years of nonstop growth, according
to CBRE. However, challenges on the horizon consist of increased hotel
construction in local markets, low inflation, the sharing economy, and
book-direct, best-price guarantees for hotel rooms. Countering these headwinds,
international and domestic travel rose 3.8 percent during 2016, increasing the
demand for hotel rooms and contributing to the demand outpacing supply,
according to Marcus & Millichap. Norfolk-Virginia Beach, Va.; Orlando,
Fla.; and Atlanta experienced high increases in demand for hotel rooms.
Industrial — Three trends are spurring growth in the
industrial sector: low, steady vacancy at 5.2 percent nationwide; strong
pre-leasing of 54.2 percent; and the strength of e-commerce, which commands 25
percent of leasing demand. The U.S. absorbed nearly 165.6 million square feet
of new industrial properties YOY, while nearly 221.2 msf of new inventory is in
the pipeline, according to JLL. Pressure continues for faster shipments and
lower costs for consumers, resulting in companies investing in locations that
are closer to labor and their customers.
Multifamily — Consistent good performance is the mantra of
the multifamily sector for 2018. Yardi Matrix predicts multifamily will
continue its long run, buoyed by the strong economy and job growth; the shift
to renting property by many baby boomers; and the continued support by
millennials. Hurricanes Irma and Harvey helped to readjust the supply and
demand equation for multifamily, particularly in Houston.
Office — As large, multinational companies spread globally,
more firms will rise from emerging economies. By 2025, more than 45 percent of
the Fortune Global 500 will come from emerging economies, compared to 5 percent
in 1990, according to Cushman & Wakefield. The technology sector is
creating a new generation of companies that could compete in more diverse
locations in secondary markets, such as Seoul, South Korea; Stockholm; and
Austin, Texas. The total revenue for the
tech sector grew from $600 billion to
more than $6 trillion over three decades, resulting in a new crop of firms.
Retail — As retail
continues its marketplace transition, the top 90 U.S. shopping centers
have spent billions of dollars to renovate their space, captivating shoppers
with more food and fun; community connections; and stronger curb appeal. More
than 41 percent have upgraded their food and beverage offerings; 34.4 percent have
renovated tenant space; and nearly 30 percent
have boosted entertainment, according to JLL.