Expect a Strong Close to a Strong 2018

Expect a strong close to the end of the year. 2018 has been a healthy year for investment activity and real estate performance, living up to initial expectations and surpassing the anemic performance in 2017. “Investment performance in 2018 thus far has met our initial expectations. We anticipated a strong year and have ultimately seen this across the board for all product types,” Adam Hooper, co-founder and CEO of RealCrowd, tells GlobeSt.com. Opportunity zone funds and blockchain are expected to fuel a strong close to an already healthy year, as well as activity well in to 2019.

Industrial and multifamily product has continued to be the darling assets classes this year. Industrial has been driven by e-commerce industry, which is expected to surpass $700 billion by 2022, according to Hooper. “Demand for industrial properties across the U.S. has continued to rapidly grow,” he says. “In fact, industrial vacancy across the nation continues to be at an all-time low, hovering around 4.8% at the end of Q2 this year.” Multifamily activity has thrived in secondary markets this year, where Hooper says that “supply constraints and new construction costs prevent class-A development, thus creating opportunity in value-add strategies for older vintage properties.” There has been a boom in multifamily construction activity across the nation, but investment activity has yet to wan. “Multifamily saw a rapid influx in development over the last few years and many investors were uncertain as to whether or not this would result in an oversaturation of the market,” adds Hooper. “Owners and investors who are closely monitoring the development pipelines of specific submarkets will continue to find value within the multifamily space.”

Industrial and multifamily have been the darlings of commercial real estate this cycle, so it is no surprise that they lead the market this year. However, retail and office show the strength of the whole market. “Retail, despite a doom and gloom outlook by many, has presented strong value-add and redevelopment opportunities,” says Hooper. “As traditional retail malls shift toward more experiential-focused centers, there has been an influx of projects repositioning existing malls into lifestyle centers or into alternative uses altogether. Office this year has seen a slight plateau in rent growth. However, there is still strong demand for quality office properties with contractual tenants with long-term leases in place.”