The ULI forecast, which culled the input of 48 economists and industry analysts, is pointing to the industrial sector to be the strongest, with 2018 availability rates at 7.4 percent, well below the 20-year average of 10.1 percent, with long-term averages in 2019 and 2020 at 7.5 percent and 7.7 percent, respectively. The lodging sector is expected to total 2018 and 2019 occupancy rates of 66 percent, a post-recession high, before dipping to 65.8 percent in 2020.
The long-struggling retail sector is expected to show new vigor, with expected retail availability rates for 2018 and 2019, at 9.8 percent and 9.9 percent, respectively, with a 10 percent rate being reached by 2020. This year’s office vacancy rate is projected to be remain unchanged from the actual 2017 rate at 13 percent and is forecast to rise to 13.2 percent in 2019 and 13.4 percent in 2020.
On the housing front, survey respondents believe the vacancy rate for the multifamily sector will reach five percent in 2018 and 5.2 percent in 2019 and 2020. Single-family housing starts are forecast to reach at 923,000 homes in 2018 before rising in 2019 to 987,500 starts and falling again to 925,000 in 2020. Home prices are pegged to rise an average of 5.3 percent in 2018 and 4.3 percent in 2019.
“The outlook for individual property sector fundamentals generally continues to reflect the characteristics of the current real estate cycle,” said ULI Leading Member and Survey Participant Andrew Warren, Director of Real Estate Research at PwC. “Fundamentals either are steadily improving or appear to have stabilized at sustainable levels. “Despite differences in performances between property sectors, there is no indication that we are about to see any imbalance in 2018 that will send any of the sectors into a significant downturn.”