Turning the calendar over to a new year is a good time to reflect and reassess. That holds true in commercial real estate, especially in reallocating capital and realigning investment strategies. There’s no shortage of white papers and research on capital markets by all industry sectors of commercial real estate, ranging from banking and brokerage to debt and equity sources, but what today’s CRE practitioner is searching for is a reconciliation of the plethora of data and conflicting views into an outlook that puts events and trends into perspective and paints a clear picture of what lies ahead in 2020.
Chapter 1: Heavy Investment in Debt
First, let’s set the stage for this summary of the capital markets entering 2020. Chapter 1 begins against the backdrop of $4.36 trillion of investments on the debt side of the ledger, according to Moody’s Analytics, the highest since before the Great Recession — from all the CRE lending entities, including REITs, pension funds, government-sponsored enterprises (such as Fannie Mae and Freddie Mac), construction lending banks, and permanent debt sources like CMBS. The U.S. economy is still chugging along into its 11th year of recovery (125 months at year-end 2019), with the November gross domestic product revisions back up to 2 percent — and December’s surprising Bureau of Labor Statistics report showing 266,000 jobs created in November; U3 and U6 unemployment levels declining to 3.5 percent and 6.9 percent, respectively; and a 3.1 percent year-over-year wage growth. Click to read more at www.ccim.com.