CBRE Report Released|2016 Global Real Estate Market Outlook

From CBRE 2016 Global Real Estate Market Outlook

Moderate economic growth with low interest rates, punctuated with bouts of pessimism and volatility—the factors that have characterized the world economy for the past few years—are likely to continue in 2016, supporting moderate growth in commercial rents and investment sales volume globally, according to CBRE Group, Inc.’s 2016 Global Real Estate Market Outlook.

“The current environment of variable but generally improving growth in the developed world, alongside low interest rates and low inflation, is very supportive of consumers and commercial real estate markets,” said Richard Barkham, CBRE’s global chief economist. “There are some risks for sure, including weakening sentiment due to volatile stock markets, rising interest rates in the U.S. and the U.K., financial stress in emerging markets and the slowdown of the Chinese economy. However, because consumers in the U.S., Europe and even China are in good shape, we think the global economy is strong enough to withstand these challenges and that the real estate and economic reality will be better than expected in most places in 2016.”

• Economy | Expect 2016 to be a year of volatile markets but steady economic growth. Consumers in the U.S., EU and many parts of Asia Pacific are spending gains from rising incomes, low interest rates and low oil prices, which should support GDP growth.
• Rents | In 2016, global prime rents across the three major property types—office, industrial and retail—are expected to grow 2.2% on an annual basis, according to estimates from CBRE’s Global Rent Index.
• Capital Markets | Global commercial real estate investment markets are expected to remain active in 2016, but the pace of growth is anticipated to slow after six years of recovery and price appreciation.
• Office | Most U.S. and European office markets are expected to tighten further in 2016 as demand for space is expected to outpace limited new development. However, Asia Pacific office markets will be more mixed.
• Retail | Retailers and mall operators are adopting new “placemaking” strategies to compete with e-commerce, which combined with stronger consumers, should stimulate more demand for retail space globally.
• Industrial | Robust demand from e-commerce and third-party logistics companies for warehouse and distribution space—including for smaller in-fill locations within major metros—will continue to reshape the industrial market.

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