Less temporary than the election-related demand slump is another trend PGIM sees for the coming year: continuing occupier caution. “Global absorption remains sluggish compared to past cycles and we do not anticipate an acceleration in the near-term,” the report states. “Key office and retail occupier groups remain under pressure, while logistics markets are outperforming.”

Furthermore, PGIM sees debt constraints holding back development: The firm sees lender caution toward development projects in spite of elevated rents. “Low supply growth is supporting the rental outlook, although there are risks in emerging markets,” according to PGIM.

Investors have been targeting the major markets in the US and globally, and PGIM expects this trend to continue through '17. “The share of capital going to major markets remains elevated,” according to PGIM's report. “The gap in occupier performance is narrowing, but we do not anticipate a significant rotation of capital away from major core markets in 2017.”

PGIM also sees cross-border flows edging up again in the coming year. “Cross-border activity slowed in 2016, but stabilizing foreign direct investment growth and low returns correlations point towards a pick-up in 2017,” the report states.

Meanwhile, PGIM observes a trend toward slowing momentum on pricing. “Concerns about elevated pricing” are slowing the pace of yield shift, and PGIM sees “limited scope for further compression” in major markets that already have very low yields.

Investors' focus is turning to income growth, says PGIM. “Forecasts for rising bond yields point towards higher required returns for real estate,” according to the report. “Investors will increasingly be on the lookout for income growth and we anticipate growing interest in value-add strategies.”

There's a growing interest in alternatives, PGIM says. The firm attributes this broadening appeal of alternative real estate sectors to investors' interest into tapping into growth potential arising from favorable structural trends.

Last but not least, emerging markets have been attracting more capital. “Expectations of an increasing gap with GDP growth in developed markets points towards rising investment activity in emerging markets,” says PGIM.

NEWARK, NJ—The surprise outcome of the US presidential race isn't the last we'll be hearing of that influencer. In its Trends for 2017 report issued Tuesday, PGIM Real Estate cites election-related uncertainty and a variety of trends related to investment and development activity as key factors that will shape the year ahead, domestically as well as globally.

“Reflecting the broader economic story, real estate occupier markets are characterized by elevated uncertainty, moderate growth and an absence of meaningful acceleration,” according to PGIM's report, assembled by a team with VP Greg Kane listed as lead author. PGIM is looking toward the new year with “some optimism” but continues to be cautious about the outlook.

Political events such as the Brexit referendum and the surprise victory of Donald Trump jolted the markets over the course of this year, and PGIM notes “more political uncertainty to come” in '17. Voters in France, Germany, the Netherlands, Norway and South Korea all are scheduled to go to the polls next year.

“If recent outcomes are anything to go by, electoral processes will cause further disruption—at least in the run-up to voting—while results will remain hard to predict.” And while major national votes can have a detrimental effect on space demand, the aftereffects usually fade after a couple of quarters.

Less temporary than the election-related demand slump is another trend PGIM sees for the coming year: continuing occupier caution. “Global absorption remains sluggish compared to past cycles and we do not anticipate an acceleration in the near-term,” the report states. “Key office and retail occupier groups remain under pressure, while logistics markets are outperforming.”

Furthermore, PGIM sees debt constraints holding back development: The firm sees lender caution toward development projects in spite of elevated rents. “Low supply growth is supporting the rental outlook, although there are risks in emerging markets,” according to PGIM.

Investors have been targeting the major markets in the US and globally, and PGIM expects this trend to continue through '17. “The share of capital going to major markets remains elevated,” according to PGIM's report. “The gap in occupier performance is narrowing, but we do not anticipate a significant rotation of capital away from major core markets in 2017.”

PGIM also sees cross-border flows edging up again in the coming year. “Cross-border activity slowed in 2016, but stabilizing foreign direct investment growth and low returns correlations point towards a pick-up in 2017,” the report states.

Meanwhile, PGIM observes a trend toward slowing momentum on pricing. “Concerns about elevated pricing” are slowing the pace of yield shift, and PGIM sees “limited scope for further compression” in major markets that already have very low yields.

Investors' focus is turning to income growth, says PGIM. “Forecasts for rising bond yields point towards higher required returns for real estate,” according to the report. “Investors will increasingly be on the lookout for income growth and we anticipate growing interest in value-add strategies.”

There's a growing interest in alternatives, PGIM says. The firm attributes this broadening appeal of alternative real estate sectors to investors' interest into tapping into growth potential arising from favorable structural trends.

Last but not least, emerging markets have been attracting more capital. “Expectations of an increasing gap with GDP growth in developed markets points towards rising investment activity in emerging markets,” says PGIM.