- The U.S. commercial real estate market will see prudent expansion in 2020, according to a new survey of North American brokers and industry analysts. The survey, conducted by Transwestern and Devencore Ltd., found that medical office leasing will be higher than in 2019 and will outpace leasing in the general office and industrial markets.
- Nevertheless, respondents said they were concerned about the growing costs of building out medical offices as well as changing healthcare regulations, which could impact how medical spaces are utilized.
- Slightly more than half of the 2020 Commercial Real Estate Market Sentiment Survey’s respondents said they believe office rents will be higher in 2020, elevated by new construction deliveries. As for the industrial market, respondents said they were concerned about rising construction prices and lack of available land. However, in select markets, infill industrial construction is becoming more favorable.
Elizabeth Norton, managing research director for Transwestern, said in a press release that “tight conditions and healthy expectations for e-commerce activity continue to drive industrial, while medical office is helping to bolster the office sector, which nears flatter conditions.”
She also said there are red flags that could affect contractors building in these markets this year. These include political turmoil, upcoming elections and an elevated construction pipeline in select regions.
The 2020 presidential election poses a big question mark for contractors, creating uncertainty for U.S. businesses. Throughout the year, taxes, health insurance, defense contracting and trade regulations could be up in the air and subject to quick change, depending on the outcome of the election, she said.
Anirban Basu, chief economist of the Associated Builders and Contractors, said in a webinar last month that the distinctions between incumbent President Trump and the Democratic candidates are greater than with candidates in past elections, which may cause contractors and companies to develop a wait-and-see attitude.
Construction company leaders who have benefited from President Donald Trump’s rollback of expensive regulations may be afraid that will change with a new commander-in-chief, Stephen Sandherr, CEO of Associated General Contractors of America, said in a separate presentation.
Nevertheless, construction economic experts agree that infrastructure will remain lucrative, as they expect a comprehensive, bipartisan federal package to repair aging roads and bridges.