CHICAGO—As reported in GlobeSt.com, Cornerstone Realty Advisers recently published its latest Global Listed Property Review, an examination of the latest global economic trends and how all this will impact the US. And Dave Wharmby, a managing director of Cornerstone, tells GlobeSt.com that, contrary to talk among some that the present US economic expansion could be in its latter stage, there is an argument that we're just beginning the real economic expansion.
"It feels like this is a longer game than we have had in the past," he adds. "It feels like there is much more runway this time." For the past few generations, economic output would resemble a hockey stick. "There was a slow build up and then it would accelerate." However, over the last six years or so that accelerator seems to have been missing, and the long, slow build up has gone on for an extended period. "We haven't yet gotten the productivity gains and the housing expansion that you would expect."
Wharmby believes there is a good chance the expansion will continue due to the secular demographic changes occurring all over the US. Most importantly, millennials are fueling an apartment boom by putting off home purchases. "All of that has driven demand for urban apartments and new rental communities." Furthermore, "the supply pipeline was shot down for about three years," leading to a huge amount of pent-up demand. Combined with the demographic shifts, he does not see this trend reversing in the next few years.
"It's a fascinating time to be a real estate investor," he adds, because these demographic shifts are being felt throughout several sectors, not just apartments. The emphasis on living within urban cores has fueled demand for new retail in these areas, as well as downtown office booms as more companies move closer to the millennial-age employees. "There is also a pick-up in demand for close-in industrial locations," so distributors can cut down delivery times to the residents of these new apartment communities.
There has been some short-term noise in the world of REITs, he adds. However, the news in October has been quite good, and this has reassured many. Especially important has been the growing conviction that the Fed will soon raise interest rates, an action that would remove much of the uncertainty that has hovered over equity markets. "These markets are still quite attractive over the long-term. They own hard assets, and the income from these assets are driven by local market conditions, and those are still quite healthy in many areas around the globe."
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
