“This will be the result of the economy reacting hopefully to the anticipated changes the Trump administration has planned for the investment market, banking industry, Wall Street and other relevant areas,” he continues. “The next year should be very interesting as far as appraising commercial real estate is concerned, but difficult to predict in advance.”

In the New York area in particular, the survey finds that occupier demand has fallen across the region, which has pushed rental expectations into negative territory for prime and secondary retail and secondary office. On top of that, there's a 1.5% decline in the outlook for the all-property prime office average.

However, the data for New York also suggest that investment inquiries picked up in Q4 at the fastest pace since a year ago. Foreign interest also accelerated into the last quarter, with overseas buyers' appetites particularly strong for offices.

Moreover, RICS suggests that investors may be looking to buy some of the extensive new commercial property that is in the New York pipeline, despite the lower expectations for rent gains.

“The outlook for commercial construction, particularly of offices and residential properties, has been exceptionally robust as of late,” says respondent Paul Roberts, lead project controls manager for Faithful + Gould in New York City.

In a short period of time, “we've seen a large number of these types of projects under construction in Manhattan and the outer boroughs, including Hudson Yards, several residential towers in Long Island City and a combined residential/commercial project in downtown Brooklyn,” Roberts continues. “However, as we move into late 2017, there is potential for a slight slowdown of construction when this oversaturation of the CRE and residential markets leads to increased vacancy levels and delays new projects from starting.”

NEW YORK CITY—Even amid the uncertainty brought about by only the second increase in the federal funds rate in 10 years and the advent of a new presidential administration that is already proving to be disruptive on a number of fronts, a survey of US commercial real estate participants predicts a fairly strong year for the industry overall. However, respondents to the Q4 2016 RICS US Commercial Property Monitor see the New York City metro area as a possible exception.

Survey respondents expect a positive outlook for rent growth throughout the coming year, with the largest gains projected in the prime office and multifamily sectors, both near 3%. They're followed by secondary multifamily (2.3%) and prime industrial (2.0%).

Conversely, RICS says expectations for secondary office and secondary retail are a little more downbeat. But the development starts indicator continues to show a positive trend in the pipeline, led by the office sector. Meanwhile, investor demand increased across all sectors and inquiries from international investors also continued growing.

“There's some uncertainty due to the Fed raising interest rates and bond rates increasing substantially after several years of very low rates, which will reduce the cap rate compression experienced over the past eight years,” says Michael Yovino-Young FRICS, president, Yovino-Young Inc., Berkeley, CA. “Cap rates have already increased modestly but are predicted to increase further in the next 18 months.

“This will be the result of the economy reacting hopefully to the anticipated changes the Trump administration has planned for the investment market, banking industry, Wall Street and other relevant areas,” he continues. “The next year should be very interesting as far as appraising commercial real estate is concerned, but difficult to predict in advance.”

In the New York area in particular, the survey finds that occupier demand has fallen across the region, which has pushed rental expectations into negative territory for prime and secondary retail and secondary office. On top of that, there's a 1.5% decline in the outlook for the all-property prime office average.

However, the data for New York also suggest that investment inquiries picked up in Q4 at the fastest pace since a year ago. Foreign interest also accelerated into the last quarter, with overseas buyers' appetites particularly strong for offices.

Moreover, RICS suggests that investors may be looking to buy some of the extensive new commercial property that is in the New York pipeline, despite the lower expectations for rent gains.

“The outlook for commercial construction, particularly of offices and residential properties, has been exceptionally robust as of late,” says respondent Paul Roberts, lead project controls manager for Faithful + Gould in New York City.

In a short period of time, “we've seen a large number of these types of projects under construction in Manhattan and the outer boroughs, including Hudson Yards, several residential towers in Long Island City and a combined residential/commercial project in downtown Brooklyn,” Roberts continues. “However, as we move into late 2017, there is potential for a slight slowdown of construction when this oversaturation of the CRE and residential markets leads to increased vacancy levels and delays new projects from starting.”