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 Commercial Market - Spring 2015 |
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In This Issue Yardi News Client News Rexford Industrial Takes a System-Oriented Approach to Portfolio Growth Read More» Capstone Advisors Selects Yardi Voyager for Investment Management and Property Management Client in Focus Product & Technology News Does Business Intelligence Achieve Transparency? Read More» Industry Trends Construction Drivers Resilient Cities EventsSpring YASC 2015 ContactYardi Systems Sales: 800-866-1144 SUBSCRIBE: Click here to sign up for the newsletter. |
Construction DriversCommercial building is on track to increase 15 percent in 2015, and multi-family housing to grow 9 percent in dollar value and 7 percent in units, says a recently released report by Dodge Data & Analytics. But since construction is usually a lagging indicator of the market, favorable economic conditions are a leading cause of this positive outlook, according to economists and construction experts, who agree that the U.S. economy is in better shape than most people realize. Reason #1: According to the Bureau of Economic Analysis, U.S. real gross domestic product increased at an annualized rate of 3.9 percent in the third quarter of 2014. Previously, it estimated an annual expansion of 3.5 percent. In the second quarter, GDP increased at an annualized 4.6 percent. Reason #2: Residential and non-residential construction is finally catching up after the prolonged slump of the recession. "Whatever's happening now in terms of job growth and expansion is the most stimulatory framework that's ever existed, because the federal funds rate is essentially zero percent, so there's even more reason to be optimistic about growth," Alex Carrick, chief economist at CMD, told Commercial Property Executive. "All of that will translate eventually to stronger construction activity, particularly on the private-sector side." Reason #3: In the most recent National Association of Home Builders/Wells Fargo Housing Market Index, released in November, builder sentiment increased 4 points to 58. "Any score over 50 shows more builders are optimistic about the future than pessimistic; 58 is a good indicator," said Robert Denk, senior economist at NAHB. Occupancies and rent growth continue to support multi-family development, although construction is growing at a slower place as the sector matures, according to Dodge Data & Analytics. In the residential market, there is currently a "legacy effect," according to Carrick. During the recession, foreclosures forced many homeowners to move to apartments. Although the single-family market is showing signs of improvement, the sector continues to lag as prospective homeowners remain cautious. "If you were thrown out of your home, you will be hesitant about jumping back into the single-family market," Carrick explained. Read the rest of this post on Commercial Property Executive. |
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