LOS ANGELES-In 2013, the office and industrial markets saw great improvement and investment interest. These markets can expect to continue improving in 2014, according to Marcus & Millichap experts during an office and industrial market outlook webcast on January 8. Speakers Alan L. Pontius, SVP and NOIGP national director, Hessam Nadji, SVP and chief strategy officer, and William E. Hughes, SVP, offered a look back at 2013 and a forecast of the year ahead.

Overall, 2013 was a year of “escalating volumes,” according to Pontius, who anticipates continued confidence and acceleration in 2014. Interest rates will likely rise throughout the year, however, the three speakers did not estimate this to necessarily be negative, pointing out that funding will be the key driver over interest rates.

In a look at successes, Nadji noted that retail sales for the year were up 27% above the 2007 peak, and up 4% in November over last year. Job growth was healthy: the country added 2.3 million jobs during the course of the year. And, corporate profits overall were up 27%. All of these factors show a stable and improving market; however, not everything was rosy. Although 2.3 million jobs were added last year, we should be averaging 3 million to 3.5 million jobs annually to accommodate new entry into the job market.

Corporate investments posed an additional concern. While profits were up 27%, corporate investing was only up 2%, showing a lot of caution in the market. In 2014, the speakers expect investors to feel more comfortable and start taking more risks, reinvesting more of those profits into the market.

The market still remains flooded with capital and a wide variety of financing outlets, from life companies to CMBS lenders, which doubled their output in 2013. These experts expect CMBS will continue to be a major player in the marketplace throughout 2014. And while interest rates will continue to rise, they will still be historically low. These ups and downs overall equate to a “choppy economy,” but Hughes explains that a choppy economy isn't necessarily a bad thing, noting that “if the economy was booming everything else would be booming too, [like] interest rates and inflation.”

Rounding out the webcast, Pontius gave a brief investment outlook, explaining that the excess capital is providing opportunities in secondary and tertiary markets. Investors are making decisions based on location and then bringing yields in.

Overall, the three market experts agreed that we could expect a bullish year in 2014.