As New Jersey rings in 2017, commercial real estate is poised for another year of strong activity. We asked executives what top three trends will impact their business after the ball drops. Here’s what they’re watching:
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Rising Interest Rates: Since the election, the 10-year Treasury rate has risen by more than 150% and Libor has increased more than 125%. Everyone has to adjust to new and increasing borrowing costs, Eugene says.
Tepid Suburban Job Growth: “There’s not much of a change here, but the possibility exists that a Trump presidency reduces regulation and repatriates significant overseas corporate profits, and the US economy kicks into higher gear later in the year,” he says. “This should hopefully provide increased job growth and additional office employment, making the office market look somewhat more attractive.”
Significant Increase In Stock Market: This should cause additional allocation to real estate as institutions adjust their asset allocations to meet preset targets, Eugene says. This means additional institutional investment in real estate, which could increase prices enough to offset the negative impact of increased borrowing costs.