chi-RevathiGreenwood_Gray (3) Revathi Greenwood, head of research for the Americas at Cushman & Wakefield

CHICAGO—The stock market recently suffered two of its largest point declines in history, a volatility that certainly caught the attention of everyone in commercial real estate. Many have been on the lookout for any sign or occurrence that the long but steady recovery has come to an end. However, the market was also quite volatile during 2016, and the economy sailed through that turmoil unscathed.

“In many ways, we are back in 2016 territory,” Revathi Greenwood, head of research for the Americas at Cushman & Wakefield, tells And just as in 2016, we are seeing a wildly swinging market paired with a strong economy.

Greenwood points to data from Thomson Reuters, which show 294 S&P 500 companies have reported fourth quarter figures to date, and 77.9% have reported earnings and 80.1% have reported revenue above analyst expectations. In addition, the economy has created jobs at a relatively good pace and consumer confidence remains high. “The fundamentals are really quite strong these days.”

She adds that recent wage gains have made higher-than-expected inflation a possibility, a factor which could undermine confidence or push the US Federal Reserve to increase interest rates more than expected. But if inflation stays around 1.9%, it may calm the waters.

On the other hand, any sharp fall will quickly show up in millions of 401K statements, and that could start draining away the consumer confidence that helps sustain economic growth.

An unsteady market could also push investors to allocate more capital toward real estate, Greenwood says. Those interested in real estate assets tend to think of long-term results, and US real estate has lately developed a worldwide reputation for stability. “We tend to ride out troubles.”

The stock market did gain 21% in 2017 alone, but even the most optimistic investor knows that party has to end. And real estate also had a good year, with a solid promise of more to come. According to Chicago-based NCREIF, core institutional properties in the US recorded total returns of just under 7% for 2017.

Greenwood expects that real estate investment volume will at least remain steady in 2018, even though the cap rates for properties in core cities have sunk due to the intense competition. “There is a lot of investor interest in secondary markets,” she says, especially for class A industrial buildings and office properties in the Sunbelt.