The US economy registered its second-best showing since the financial crisis during the third quarter.  According to the Bureau of Economic Analysis' most recent estimate, published in late December, real GDP expanded at an annualized rate of 4.1 percent between July and September. That represents a substantial improvement from earlier in the year and the flat line in growth during late 2012.

What's driving the better numbers? The revised data reflect contributions from personal consumption of goods and services and a rise in private inventories, which by itself accounted for one-third of the net statistic. Investment in non-residential structures and residential property added two-thirds of a percentage point. That number could improve as for-ownership residential and non-residential commercial development activity pick up.

Apart from gains in the property sectors, the apparent resilience of corporate investment and hiring in the face of government dysfunction is lifting measures of confidence. Nonetheless, the pace of expansion is expected to slow even as the recovery becomes more entrenched.  Our baseline projection shows the economy growing at an annual rate of 2.0 percent during the fourth quarter, dragged down in part by the public sector.

The outlook is modestly positive. After two years of underperforming versus potential, growth will quicken to just short of 3.0 percent during 2014 and 2015. For commercial property capital markets, there is a critical offset. Broad inflationary pressures remain largely in check but real interest rates will continue their upward march, nearing a nominal rate closer to 4.0 percent over the next 18 to 24 months.