Imagine this statement in 1 sentence; the industrial market/logistics is at an all-time high, triple-net cap rates are increasing nationally, the multi-family sector is on fire in major metro markets but predicting a major change, and single-family inventory is at historically low levels, but prices have dropped overall…doesn’t make sense does it? It never will. Too many people are trying and always have categized the real estate market inaccurately, it is location/market specific and it always will be. Downtown Seattle’s condo market is NOT the same as the Raleigh-Durham, N.C. market and while we are inter-connected more than ever, these predictions and assumptions of the future are dangerous if taken seriously. I have witnessed the retail market in the Herald Square/NYC market drop nearly in half over the last year but not be as affected or even increase in the suburbs. I have seen the multi-family market explode in secondary markets with commuting proximity to NY, then a historically retail only site get sold for a near record high for an industrial building. Its crazy and nuts and even the markets have their own stories within them depending on what category of real estate it is. You see that’s the thing, trends are all about the market and the category. I’m genuinely concerned for any one that makes a real estate decisions or voices an opinion based on what they read or hear about on “national levels” or “averages” ….the U.S. is a vast and diverse market. Now I know what you’re thinking, where are your datapoints and my response is; my experiences, what I do every day.
So we are now at this weird point in history with GDP GROWTH, unemployment near record lows, interest rates still very low, but a sense that a storm in brewing in the CRE sector and perhaps it is but no one can really put their finger on it. And in some cases, pricing is dropping, and inventory is not moving as quickly. My underlying point is that I would caution anyone to pay too much unnecessary attention to a general statement about the real estate market. Know your market and what’s happening in it, the jobs, the new residential, the university’s expansion or contraction of drivers. Keep the national or averages on the peripheral and be aware of them but don’t cash-in your 401K because of an article you read in a publication or saw on social media.