Expectations & Market Realities in Real Estate: 2020

The nation’s longest-ever economic expansion forges ahead. As trade tensions have eased, we have become more optimistic about the economy than we were a year ago. We expect steady, slow growth to continue this year, as has been the case throughout much of the recovery from the Global Financial crisis (GFC). Since the GFC, commercial real estate (CRE) has been a preferred asset class, offering investors solid risk-adjusted returns. Investors are likely to keep a risk-off approach, backing away from high-risk assets such as stocks and instead forging ahead with safe-harbor investments. This is good news for CRE transactions. While overall deal activity was down in 2019, volume is picking up for particular property types and markets as investors keep looking for deals this late in the cycle. We expect CRE prices to stay at record highs as space market fundamentals remain healthy; strong valuations will likely support the high prices. We forecast CRE capital appreciation returns to decline