SAN FRANCISCO—“Interest rates could be pushed higher in 2015 though likely for the 'right reasons'—an improving economy. Some cap rate increase but likely not enough to make much of a difference in real estate investment nor confidence.” That is according to Cushman & Wakefield's Robert Sammons, regional director of research for the Americas.
Sammons conducted the REIS San Francisco Roundtable breakfast today at the Mandarin Oriental Hotel here, where he discussed current and projected dynamics of the US office, industrial, retail and multifamily landscapes and provided local context for the Northern California market region.
Some of the national issues discussed were job growth, economy and capital markets, and property sectors. “August numbers were rather disappointing at 142,000, although previous six months were strong,” he said. “September and fourth quarter months should reveal direction the US is heading.”
Consumer confidence, he added, has been up and down “with retail sales improving in August and with fuel costs lower, it should at least result in a near-term increase.”
Capital markets, he adds, have been very healthy, especially within core/gateway markets across most property types. “The issue primarily has been too many investors chasing too little product (coming to market). Investors looking at value-add plays (leases soon rolling) in many markets versus fully leased properties.” Secondary markets, he adds, are getting a close look as some investors pushed out of gateway markets due to pricing and desire for more upside. “Geopolitical issues are at the forefront; mid-term election could be a near-term factor with priorities that could change though more likely in 2016.
In the different sectors, he noted that nationally, multifamily is “quite healthy though some competition from investors who have purchased single-family portfolios to lease; most gateway markets strong.” He also pointed out that hotels are recovering though there is no major uptick from larger group meetings yet.
Office—both CBD and Suburban—he said, are bouncing back, a trend of “urbanization in place (24/7 communities) with Suburban markets that can take advantage of outperforming those that can't (Silicon Valley morphing into more mixed-use).”
The industrial sector, he said is recovering due to some extent to a rise in distribution centers due to omnichannel retailing and those taking advantage of same-day/next-day deliveries.
On the retail front, he noted that luxury and discount segments healthy though mid-priced segment still trying to gain footing. “Tourism continues to be very strong… Many retail outlets are looking at fast-fashion growth and if it is here to stay.”
Check back with GlobeSt.com for more comments from Robert Sammons as he drills down locally to the San Francisco Bay Area.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
