2019 Real Estate Forecast
The NAIOP Annual Real Estate Market Forecast is always very well attended and this year’s event, held at the Westin Boston Waterfront, was no exception. What follows is my take on this informative presentation:
Forecast calls for mostly sunny skies with a chance of occasional “bearishness”.
It came as no surprise to anyone that the Cambridge real estate market is Hot, Hot, Hot! With zero vacancies in Kendall Square, the action, especially for design and construction projects, is being pushed further out – to opportunities like Cambridge Crossing and Discovery Park. While Alewife rents continue to be attractive for lab spaces, Waltham is the new “Place to be” dominating recent leasing activities.
Then there’s the suburbs: Robotics, manufacturing and light industrial drive development both downtown and in the suburbs. Look for more tech spaces to join them as the sector matures and stabilizes.
Coworking spaces will continue to expand. WeWork, which holds 1M Sq. Ft. of space in Boston seeks to double that. Startups especially benefit from the flexibility of paying for only as much space as required. The energy these collaborative spaces foster is being noted by corporations large and small who are incorporating more of these ideas into their own designs. Which could mean more fit outs and redesign projects in the future.
2018 was a very good year and likely will be the strongest year in the current cycle. But that’s not to say the outlook on real estate market trends in general is totally sunny. Far from it – although the economy has good fundamentals, some areas may be overheating due in part, to a scarcity of labor.
National trends are continued cooling in areas like NYC, San Francisco and Seattle, while in the South and West, Miami and Houston respectively, are expanding. Boston is comfortably in the middle at the national average.
Although US interest rates are higher than other parts of the world, most notably Europe and Japan, US small business confidence indices are the highest since the start of record keeping. And industrial is at an all-time high, driven in large part by online shopping. Rumors of the demise of retail have been greatly exaggerated. Just look at Amazon, who’s HQ2 choice was decided by where they could get tech talent as well as meet their other needs. Consequently, there are still a lot of opportunities in innovative retail for both new design and construction projects, and reconfigurations of existing spaces.
Overall, the economic system appears to have sufficient liquidity to remain resilient through any approaching storms.
In conclusion, the general impression is that 2019 will be just slightly cooler, with 2020 being the worst of the cycle. But even that will be minor compared to other bad years.
Hope your 2019 is both sunny and successful.
Emma Pina is a Client Services Manager with expertise ranging from early research and analysis through project delivery. Her commitment to excellent client service and team engagement gives Emma a holistic appreciation for a client’s objectives and core values, and how that translates to effective project execution.