Low mortgage rates, strong labor market and continued consumer demand are still driving the engine behind this economy.
The Conference Board Employment Index continues to show strengthening even after some weak quarters in 2019, highlighting there’s still room for the economy to grow in 2020.
Predicted Housing Market
Housing starts across the nation have increased even this late in the cycle due to the low rate environment and consumers continuing to drive prices higher. I’d still be careful buying in today’s environment unless it’s a long term hold, but there’s a case to be made that the increasing numbers in population are buoying any fear of overbuilding. This assumption even continues to show up in housing rentals with the strong run that multi family construction and investment is still having.
Here are 3 good articles on housing stats:
Mortgage Rates Move Marginally Higher
FL Home Sales and Median Prices Show Gains
US Housing Supply Reaches All Time Low
The things to watch for are how housing demand keeps up with housing starts & permits in the coming months, as well as what the coronavirus does to consumer sentiment and global trade.
E-Commerce
E-commerce is showing it’s staying power by continuing to grow, now at a pace of 15% yearly, and its impact is obvious in how retailers are adjusting to omni channel distribution and new logistics needs in last mile warehouses. The real winners being 3rd Party Logistics companies with knowledge and experience in transportation and supply chain efficiencies. E-commerce and logistics companies accounted for more than half of all large industrial warehouse leases signed in 2019. Labor and infrastructure are the only restraints there are concerns with.
Commercial Real Estate Markets
As for the overall commercial real estate (CRE) markets, leasing activity and occupier demand are cooling off and stabilizing in most markets, while investor volumes have been steamy recently, continuing to drive up prices. 2019 was the strongest year on record for CRE in a long time. That combination could cause pessimism in a market, but everyone is relatively calm and optimistic on opportunities. There is so much capital chasing deals that some are even waiting and hoping for a slight slowdown so they can jump in and buy some new opportunities in distress.
Not deep distress like in the past, but more of a slight pricing adjustment. The supply and demand fundamentals are keeping pace with each other and the rate spreads add to those dynamics by keeping investors very interested. Now the only thing holding growth back in most CRE sectors is the limited availability of decent supply. If you’re looking to buy in today’s market, you should be confident in your decision if you “need” to buy, but wary in your decision if you just “want” to buy.
Commercial And Industrial Growth in Florida
In Tampa Bay, from St Pete to Tampa to Plant City to Lakeland and all the communities between there is unprecedented growth, construction and fervor in the market that indicates more than just confidence in our local region, but also strength in opportunities over the next 2 years as some large scale projects will come on-line in 2021. These projects will test demand and will attract attention from all over as the region gets more crowds and in-migration. The flight to quality in our local region is still occurring and that’s exciting to watch and to monitor in order to see how it all affects pricing across all asset classes and property types.
We are hosting the Super Bowl in 2021 and as big of a stage as that is for Corporate America, you can believe that many eyes will be on us. Some of those eyes might even move here and relocate their families and businesses once they see how great of a region we are to live, work and play in!
Contact Us
Call Fortress CRE, so we can talk expert advice on where your real estate strategy should be focused in West Central Florida. Fortress Commercial Real Estate (CRE) adds value to business owners looking to grow through their real estate, office and building needs.
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