Commercial Real Estate News Wrap Up: March 31, 2016
The Fed announcement that it will hold off on raising rates is welcome news for commercial real estate industry. According to a statement released by CBRE, keeping rates steady is the Fed’s attempt to calm market volatility, which improves borrowing conditions in CRE. National Real Estate Investor (NREI) reported that “no immediate impact on lending rates to commercial real estate is expected, but less volatility should slowly narrow credit spreads.” The expectation is that the Fed will raise rates later in 2016 in reaction to growth of inflation and improving employment. “The Fed expects to see an inflation rate of 1.2 percent in 2016, 1.9 percent in 2017 and 2.0 percent in 2018, provided the impact from the drop in oil prices and a strong U.S. dollar stop weighing on overall consumer prices,” reported NREI.
Bright spots in the commercial property market in Houston include health care, suburban retail and the industrial sector. According to a panel at an industry conference held that city, apartments continue to be a problem and in places where companies scaled back empty offices are expected to proliferate. A story in the Houston Chronicle reported that despite the mixed news speakers “expressed long-term confidence about the region and said they’ve been having to battle misconceptions.” The market is “going through some tough times right now, but we think it’s going to rebound,” said Carrington Brown, USAA’s executive director of investments.
The industrial boom in Kansas City continues. GlobeSt.com reports that expansion in the sector – led by a recent decision by Amazon to take all 822,104 square feet of a new spec development project there – is being fueled by companies that like the area because of its central location for distribution across the country. The rise of e-commerce has made the area even more desirable due to its central location. “If you’ve got one e-commerce facility in this country, it should be in Kansas City,” says Chris Gutierrez, president of KC SmartPort, a nonprofit economic development organization.
8+1 (That’s 9) Things You Need To Know
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