2018: A Year of Opposing Forces and What’s Ahead

2018 has been a dynamic year. Opposing forces have been pulling at both ends of the economy, with commercial real estate and the capital markets watching the interest rates, trade cycle and politics with attentiveness and concern waiting to see what happens next. A strong economy and historically low unemployment have been pushing against higher interest rates and rising costs for raw materials, all while being challenged by fundamental shifts in the commercial real estate landscape. The capital markets became more liquid as many banks eased commercial real estate standards. At the same time, alternative financing sources, including private money, flowed into the space to capture a bigger piece of the CRE debt pie. Rising interest rates, concern of a potential trade war and related tariffs as well as increased competition in capital availability spooked some players in the market. This made room for an even broader array of capital sources willing to be more creative and flexible.

Keeping track of these market shifts isn’t easy. To remain nimble today and in the future, it is essential to understand these fluctuations and see their potential short- and long-term effects on capital availability and the overall commercial real estate market.