This year, investors willprecede with cautious optimism. With strong market fundamentals,fear of a recession has subsided, but as pricing continues to climbto new peak levels, there is reason to be concerned. Industrial andmultifamily land prices are hitting new records, and constructioncosts have continued to increase, making new construction a higherrisk than before.

"I am cautiously optimistic. We are seeing record land prices at$60 per square foot for infill land in Los Angeles and OrangeCounty and $25 per square foot in the Inland Empire," TomKenny, EVP at Bellwether Enterprise,tells GlobeSt.com. "Those numbers are peaks, and any time you hitthose, you have to start being a little bit cautious. However,investors think rents are going to continue to rise and that youcan justify a new build at high costs."

Pricing is cause for concern because it requires more rentgrowth, and after several years of strong rent growth, rents arebeginning to plateau. "You have to have continued rent growth tosupport land and construction prices," says Kenny. "So, because weare at such a high, I can imagine that we will see less activitygoing into 2020. But, it is not because we are hitting any trouble.It is just people hitting the pause button a little bit because wehave been so busy over the last five or six years. There are a lotof people that don't want to have a misstep."