Five Trends Office & Industrial Investors Need to Track in 2016

Although several headwinds have already jolted the economy this year, including dramatic stock market swings and tumbling oil prices, Marcus & Millichap, a leading commercial real estate services firm with offices throughout the United States and Canada, maintains that the outlook for office and industrial properties remains positive.

“Office properties in particular were late to reap the benefits of the economic recovery, but last year’s steady improvement in performance brings positive momentum into 2016,” says industry veteran Alan L. Pontius. Pontius is senior vice president and director of commercial property groups at Marcus & Millichap. He will be one of the featured experts on a Feb. 10 webcast hosted by Marcus & Millichap that explores the outlook for the year ahead.

Pontius adds, “The steady pace of hiring over the last six years, particularly with office-using jobs, has pushed many companies to pursue additional space, and this should translate into elevated performance in the office property market segment.”

“Industrial remains at the top of investors’ lists as an asset class due primarily to continuing e-commerce-generated momentum. While the sector has always been steady, we have started to see new dimensions of rent growth that are reshaping supply/demand fundamentals.”

According to Marcus & Millichap, rising operating incomes will translate to transactional activity as investors broaden their acquisition criteria. Transactional activity for both office and industrial properties escalated significantly over the last several quarters, particularly in secondary and tertiary markets. “As we will be highlighting in our webcast on February 10, there are a lot of factors supporting the outlook for office and industrial assets,” Pontius points out. “There are several trends that are under the surface that we plan to highlight for our audience.”

According to Marcus & Millichap’s website, topics to be discussed during their upcoming webcast include:

  • International uncertainty is shaking up Wall Street. Will contagion strike the economy and CRE fundamentals?
  • The Fed raised rates and is tightening monetary policy. Will borrowing rates rise as a result?
  • Downtown or suburbs? Where are opportunities emerging?
  • Limited construction set the foundation for sector gains. Will tenant demand accelerate NOI growth?
  • Can office and industrial cap rates compress for a sixth straight year?

Pontius will be joined on the webcast by John Chang, first vice president of research services, Marcus & Millichap, and William E. Hughes, senior vice president of Marcus & Millichap Capital Corporation, Marcus & Millichap’s financing division. Each of these industry experts will offer insight into the dynamics that investors need to monitor in 2016.

“Questions about the strength of foreign economies and the repercussions of the rising value of the dollar have really pressured Treasury rates so far this year,” said Hughes. “In the webcast we will explain how these trends will affect lending rates and availability.”

Chang added, “These macro-economic forces could really influence the flow of capital into office and industrial assets and we intend to dialog about how investors can position their commercial real estate portfolios to make the most of these emerging trends.”

The live one-hour Marcus & Millichap Office & Industrial Webcast is scheduled for 8:30 a.m. PT /11:30 a.m. ET on Wednesday, February 10, and coincides with the release of Marcus & Millichap’s 2016 National Office Investment Forecast. The webcast will feature industry experts who will delve into the top trends that commercial real estate investors need to track in 2016 and also offer viewers the opportunity to ask questions of the speakers while the event is on-air.

Register online for this complimentary webcast.

From February 2, 2016 NAIOP Source – Click here to view article.

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