Presentation: Commercial Real Estate Trends and Outlook
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Transcript of Presentation: Commercial Real Estate Trends and Outlook
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8/10/2019 Presentation: Commercial Real Estate Trends and Outlook
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COMMERCIAL REAL ESTATE:
2015 INVESTMENT OUTLOOK
LAWRENCE YUN, PhD
Chief Economist, Sr. VP
National Associationof REALTORS
DONALD E. HUFFNER
Managing Director,Head of Americas
AIG Global Real Estate
RICHARD M. GATTO
Executive VicePresident
The Alter Group
ANDREW H. TROTTER, III
Chief InvestmentOfficer
Centennial HoldingCompany
COMMERCIAL ECONOMIC ISSUES & TRENDS FORUM
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Commercial Investment Sales of LargeProperties
(Properties valued at $2.5 million and over)
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Federal Reserve Commercial PropertyPrice Index
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GDP Still not Robust Below 3% for 9 straight years
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Household Net Worth at All-Time High
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Monetary Policy by Federal Reserve(zero rate policy for 6 years!)
%
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Federal Reserve Balance Sheet fromQuantitative Easing
$ million
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10-year Treasury Yield
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Non-worrisome CPI Inflation YetCOLA of 1.7% in 2015
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Rising Renters and Homeowners RentGrowth
(Above 3%)
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Oil Price
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U.S. Dollar Strength vs Euro
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U.S. Dollar Weakness vs Chinese Yuan
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Monetary Policy
Quantitative Easing Finished
Fed Funds Rate hike in 2015 Q1/Q2
Earlier Move to Tighten because ofInflation Pressure
Long-term Steady State Rate (2016
onwards) .. 10 year Treasury at 5.0% Mortgage Rates reaching 6% by 2016
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Jobs(8 million lost 10 million gained) In thousands
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Weekly New Unemployment InsuranceClaims
In thousands
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REALTOR Markets & Deal Size(Not $2.5 million Properties)
21%
22%
26%
17%
12%
1%
2%
< $250,000
$250,000 - $500,000
$500,000 - $1,000,000
$1,000,000 - $2,000,000
$2,000,000 - $5,000,000
$5,000,000 - $10,000,000
> $10,000,000
2013 CRE Lending Survey: Value of most recent sales transaction
Source: NAR
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8%
17%
25%
7%
6%
4%
18%
1% 11%3%
Current sources of financing for commercial dealsNational banks (Big four)
Regional banks
Local banks
Credit unions
Life insurance companies
REITs
Private investors
Public companies
Small Business AdministrationOther, please specify
Source: NAR
Small Banks Important to REALTORS
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REALTORS Help Small Businesses
16%
25%
25%
17%
10%
4%
3%
< $250,000
$250,000 - $499,999
$500,000 - $999,999
$1,000,000 - $1,999,999
$2,000,000 - $4,999,999
$5,000,000 - $10,000,000
$10,000,000