Grubb & Ellis Co., a full-service commercial real estate firm, recently released its 2007 Global Real Estate Forecast, which indicates the U.S. commercial leasing markets should continue to improve as construction remains in check and the economy grows enough to fuel continued business and global trade expansion. The company believes stable interest and cap rates will keep the real estate investment market healthy. Summaries from the report include:
- Businesses will use their record profits to add staff and lease more space in 2007. Landlords will have more negotiating leverage with tenants.
- The expanding economy will keep supply chains humming in 2007, generating demand for all types of industrial space. Developers are expected to add 150 million square feet of new industrial space this year.
- The housing market slowdown will have major implications for retailers in 2007. First, homeowners will be less able to tap into their home equity via cash-back mortgage refinancing and equity loans. Second, retail development targeting new residential neighborhoods may be delayed until home construction and sales pick up.
- The ongoing downturn in the housing market will be a boon for the multi-housing rental market in 2007. Landlords can look forward to a moderate rise in rental rates with the greatest risk being “re-partments”—stalled condo conversion projects that are returning to rental inventory.
“We expect the economy to find a middle ground between an outright recession and inflationary growth—the elusive soft landing—thereby striking a balance between the commercial real estate leasing and investment markets,” said Robert Bach, senior vice president of research and client services.
Complete copies of the Grubb & Ellis global and regional forecasts are available at www.grubb-ellis.com.