Commercial Real Estate News Wrap Up From Liberty SBF: July 26 2016July 26, 2016
Development and construction of new commercial real estate has continued to be a strong contributor to the U.S and individual state economies. According to a report recently released by the NAIOP Research Foundation, the commercial real estate industry supported about 3.2 million jobs and contributed $450 billion to U.S GDP in 2015. Although this overall contribution is slightly less than that of 2014, this decline can be attributed to a decline in energy prices and improved technology that has reduced the number of workers needed for projects. New York, Texas, and California were the states that benefitted the most from the commercial real estate industry, with office construction spending driving much of this economic benefit.
The Brexit continues to spur international interest in U.S commercial real estate. In an article by the CCIM Institute, investors are described as looking for stable investments, such as U.S commercial real estate, to counteract the volatility they see elsewhere. These investors are looking for less traditional investments in an effort to generate safe returns. Ernest Brown IV, a broker at Rohde Ottmers Sigel Realty, has seen that, “commercial office space is often the preferred investment for overseas investors, but we are also seeing an increase in demand for well located newer industrial assets.”
Internet commerce has driven the strongest surge in demand for U.S industrial space since 2001. Prologis, the world’s largest developer and owner of industrial real estate has seen the first six months of 2016 be its strongest in history due to a large appetite by e-commerce companies. Speculative construction increased by almost 13.5% in the second quarter of 2016, with almost 40% of this space pre-leased, and expectations are for these positive trends to continue through 2017 despite global macroeconomic trends. Regions that are most active within this space include Inland Empire, in Southern California, Dallas, and Atlanta.
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