2017 is turning out to be a good year for commercial real estate and, barring any major shocks, 2018 will follow a similar track. Investment and leasing markets should remain broadly stable through 2018 with the global economy in its best shape since the Great Recession.
2018 Prospects: Capital Values 2% Increasing , Rents 3% Increasing , Development -1% Slowing , Vacancy Rate 12.5% Rising , Leasing 39 m sqm Stable and Investment -5-10%. Lower leasing, vacancy, development, rents and capital values relate to the office sector.
Investor appetite for real estate continues.
Investors continue to target real estate despite a market light on investable assets. They are also more disciplined in their investment strategies, taking a considered approach as major real estate markets enter their late-cycle stage. This is likely to constrain real estate volume growth next year.
London regains investment crown.
London has regained its position as the top investment destination, while Los Angeles moves ahead of New York into second place. Meanwhile, Hong Kong and Singapore are attracting more capital, and Berlin has posted its strongest quarter on record, emerging as a hotspot for cross-border investors.
Companies demand flexible space
Organisations are seeking flexible working space in response to an ever-increasing pace of business change. This is driving the growth of the co-working sector, with JLL estimating that 30% of all office space will have a flexible component by 2030.
Logistics rents to edge higher in 2018
Demand is outpacing supply in logistics markets worldwide, driven by the ascent of e-commerce. This means that industrial rents are likely to edge higher in 2018, spurred by a further increase in take-up and persistently low market vacancy.