NAIOP Chicago 2017 Real Estate Forecast
Last week, NAIOP Chicago hosted its 2017 Real Estate Forecast with Marquette University’s Dr. Mark Eppli, who discussed his insights on trends and growth sectors for the coming year. Below are some key takeaways from the event:
Employment and GDP
2016: Employment gains softened by 49,000 jobs per month YOY and consumer consumption accounted for 90% of GDP growth YOY.
2017 Forecast: GDP growth will remain solid but unremarkable with some Trump-effect growth (likely 2.25-2.50%). Job growth will edge up from 2016 to 180-200K new jobs per month.
Rates and Returns
2016: Long-term debt rates increased by 0.26%; cap rates stabilized and compressed.
2017 Forecast: Debt and equity capital will flow into real estate with banks maintaining more conservative standards. Long-term U.S. Treasury rates will rise about 50 basis points and approach 3.0%. Cap rates should edge higher, approximately 25 basis points.
- 2016: Industrial and retail returns led with 12.47% and 10.98%. Apartment and office volume grew by 28% and 25%.
- 2017 Forecast: Industrial will continue to outperform in 2017 while office and retail markets perform and apartments underperform for 1-2 years.