Recent research suggests that U.S. landlords experienced an increase in competitiveness, and global real estate investment and corporate activity were at their highest levels for a decade in the first months of 2018, according to a new report from Jones Lang LaSalle.
JLL, a financial and professional services firm, says that multifamily markets are in some part of the peaking phase. The increased competition among landlords in the U.S. multifamily market attributes to a carryover of elevated rate deliveries in 2018. The company expects 370,000 units to be delivered throughout the year, and even as they slow down the demand for housing will continue to be strong.
The analysis also indicates that although last year’s impressive global real estate investment market will be hard to match, a strong economy and positive first-quarter results put 2018 on track for another successful year.
JLL’s 2018 prospects state globally capital values are increasing 4%, and rent prices are increasing 3% in the office sector. Development is peaking at 14%, while the vacancy rate is rising 12.1%.
According to the company, investors are broadening their approach to accessing the real estate sector, resulting in a softening of direct investment volumes. Although their approach is changing, debt financing, merger and acquisition activity and alternative sectors indicate they still heavily rely on the market.
Firms are also experiencing high levels of competition in talent and high-quality space which is directly shaping corporate location strategies. This is apparent because in early 2018 take-up volumes for co-working operators rose in all three global regions, according to the company.
The firm’s analysis suggest that retailers and consumer goods manufacturers are also opening more physical outlets in order to provide customers with more engaging shopping experiences. Therefore, as e-commerce companies expand stores, omni-channel retail climbs.
Lastly, high demands in the logistic sector is pushing vacancy rates to historic lows and increasing competition for quality space, which will accelerate rental growth for the remaining part of the year, according to JLL.