January 2020 Market Outlook
January 2, 2020:
2020 COMMERCIAL REAL ESTATE MARKET OUTLOOK: 2019 started off slow, then took off with the same vigor and activity of 2018. 2019 Q4 saw commercial transactions still slightly up compared to this time a year ago. Commercial sales and lease prices also continued upward due to low supply while cap rates have been trending downward (now avg 6.5% for industrial warehouse) since 2010.
Overall, retail construction declined as retail malls continue to compete with online sales. Many are pivoting and making shifts to the California model of outdoor plazas with green and cafe spaces even in Boston's colder climate.
Commercial investors are active in the multi-family arena as the residential rental market is still in high demand. And micro apartments are trending to accommodate affordable modern housing.
Commercial construction increased in 2019. Industrial warehouses were among one of the strongest increases which falls in line with increased ecommerce sales.
In the small commercial market (less than $2.5M), sales have been strongest in the industrial and apartment segments, while the large commercial market (over $2.5M) saw a decline (by about 11%) in dollar sales volume from 2018 to 2019, likely due to a decline in multi-investor transactions.
Moving into 2020... While a bit more reserved waiting for the downturn in the market that has historically hit and the upcoming presidential election, we still anticipate 2020 to flourish. We expect to see more of the same commerical market trends due to the fact that 2020 Q1 interest rates have remained low and steady and inventory for commerical office and industrial buildings also remains low; yet buyers still have the cash available to invest as they come off these profitable years.
Opportunities exist for building owners and investors:
(1) Warehouse distribution and flex office with warehouse capabilities to accommodate growing ecommerce businesses and businesses making the transition to ecommerce.
(2) Micro apartments for affordable, modern housing options.
(3) Class B/C building renovations and upgrading to technology-ready spaces.
(4) Repurposing spaces (including retail) to accommodate modern workplace preferences and work habits.
Carbone Commercial Real Estate, Inc. is one of the area’s leading commercial and industrial real estate firms, providing brokerage and consulting services to a full range of entities in eastern Massachusetts. With an office in Woburn, MA near the junction of Routes 128, Interstate 95 and Interstate 93, we are strategically well positioned in one of Massachusetts most active business locations.
If you are in the market to sell, buy or lease commercial space, please call Edward Carbone or Vicki Blazejowski at Carbone Commercial Real Estate, Inc. at 781-935-5444.
For a complete list of properties we have listed for sale and lease, visit our Listings at CarboneRE.com.
sources: Carbone Commercial Real Estate market experience, insight and opinions. Boston Business Journal. National Association of Realtors 2019 Q3 Commercial Real Estate Market Trends and Outlook. CBRE 2020 Outlook. Deloitte 2020 Commercial Real Estate Outlook.