By Robert Sammons, Senior Director, Northern California Research
Want to know what the future holds? Well Cushman & Wakefield will help you out there – at least regarding the economy and commercial real estate (CRE) – with this week’s release of our U.S. Macro Forecast. Global Chief Economist Kevin Thorpe along with research leaders Revathi Greenwood and Rebecca Rockey run down the various metrics expected to drive the economy down the road and detail what will happen in four sectors of CRE – office, industrial, retail and capital markets. Some of the highlights you ask?
U.S. GDP and job growth are both expected to remain strong; interest rates, though, are expected to continue to rise though doubtful this will ding CRE in any significant manner; risks exist but more on the political side particularly where trade policy is concerned. For office, there is a lot of development in the pipeline which will affect certain major markets but certainly not the Bay Area, especially San Francisco where almost everything under construction has been pre-leased. Industrial will continue to roar with net absorption at record levels (thank you ecommerce). Retail is a challenging category and there are several articles bringing that statement close to home under “Economic News” down below. Consumers, though, are confident and spending money not just online but within certain brick-and-mortar concepts too. And for capital markets, there remains a record level of “dry powder” though with the rising cost of capital, the “investor playbook will become more nuanced.” We’re certainly living through interesting times with one aspect of that being that this period will almost certainly end up being the longest economic expansion in U.S. history.
Of course, a lot of what has been making this a period of prosperity for many (though not all) has been technology – the sheer magnitude of developments in hardware and software ricocheting through every industry. One of the up and coming areas being affected more and more is transportation. In the early stages it was about ride-sharing – moving from taxis and black cars (if in NYC you know what I’m talking about) to what PitchBook describes as ride-hailing platforms. It has really changed the way in which many of us get around on short trips in town or to/from the airport today. Then there are the electric vehicles with almost every car manufacturer in the world coming out with some hybrid or all-electric version today or in the near future. And, of course, there is the autonomous vehicle – a term that has permeated the news for quite some time already with the pronouncements from almost everyone that any day now we’ll all be zipping around in driverless vehicles. Well that time hasn’t come yet and a couple of recent articles point out that it will likely be some time before it does. Don’t get this tone to make it out as me being a naysayer though – for it is a matter of when and not if.
Meanwhile, as has been mentioned before in the NorCal Newsline, there are a plethora of AV companies with operations in the Bay Area (73 and counting), hiring that same type of talent that works with all the other technology companies here. Feel free to take another look at our map of autonomous companies across our region.
Finally, because we’re not all going to be zipping around in an Uber or Lyft or driverless vehicle, there will remain a need for mass transit – particularly trains. It continues to be a long hard expensive slog to get it done but San Francisco came another step closer to bringing in Caltrain (and possibly high speed rail) to our fancy new Transbay Terminal this week.
We’re diligently working on our third quarter statistics so stay tuned for a full rundown on that within the next couple of weeks.
This post is commentary from the latest weekly edition of our NorCal Newsline, which you can subscribe to for free by e-mailing firstname.lastname@example.org.
Robert Sammons is Cushman & Wakefield’s Senior Director, Northern California Research. Based in San Francisco, Robert’s principal roles include working closely with the C&W research teams across the Northwest – including Northern California, Portland and Denver. Robert is author of numerous documents that delve into a wide variety of real estate and economic trends. He has been a quoted source for all manner of real estate and related economic information in many widely known media outlets across the country. Robert has 29 years of real estate experience as both an appraiser and researcher. He earned a BBA in Real Estate from The University of Georgia and an MS in Real Estate from Georgia State University. Robert is a member of the Urban Land Institute.