• Orion Investment Real Estate | Globe St.

US Economy To Remain Resilient Despite Political Turmoil

Article originally posted on Globe St. on December 25, 2017

The political world may seem turbulent, but real estate experts point out that all the headline noise of 2017 did not have any visible impact on capital markets. Therefore, many conclude that 2018 will see more of the same, with balanced fundamentals and long-term secular trends driving a steady performance.

Researchers from Chicago-based LaSalle Investment Management, for example, have just released their annual report on investment strategy, and predict that the economy will continue expanding at a steady pace, with job growth generating a robust demand for real estate. But they advise the construction of portfolios that balance “goldilocks” and “bear” scenarios.

“With buoyant capital markets, strengthening economies and the steadily rising demand for real estate in investment portfolios, ‘Goldilocks’ conditions are what real estate investors can expect in 2018,” says Jacques Gordon, global head of research and strategy at LaSalle. “North American property market fundamentals continue to experience strong, positive momentum, thanks to demand-side growth that is keeping pace with an active supply pipeline.”

However, political controversies could still create obstacles to further progress. “Uncertainties still exist surrounding tax reform, healthcare reform, trade treaties and foreign policy,” he adds.

Still, the US will most likely continue creating new jobs at a sufficient pace. And LaSalle also expects that debt will be plentiful in 2018, even though lenders will remain conservative in underwriting. Normal market conditions should persist, but lenders won’t have some of the hurdles of 2017, including the maturity of 2007 vintage loans.

“Jerome “Jay” Powell, the next chairman of the Federal Reserve, is expected to continue his predecessor’s careful path toward gradually tightening monetary policy,” according to the LaSalle report. “There is a risk that long-term interest rates increase faster than the market or Fed expect, which could lead to stock market declines and incentivize investors to rebalance their portfolios away from real estate. More likely, the rapid rise in stock prices in 2017 will lead to additional real estate allocations in 2018.”

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Headquartered in Newport Beach, California, BKM Capital Partners is a real estate fund manager specializing in the acquisition and improvement of value-add multi-tenant industrial properties in metro areas across the Western U.S. Combining a deep knowledge of this niche industrial product type with in-house capabilities including on-site property management, asset management, and leasing to reposition and institutionalize light industrial assets, the firm continues to build on its proven track record, generating strong results with high levels of transparency and engagement for investors. 

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BKM Management Company manages a portfolio of 8.6 million square feet of multi-tenant industrial properties for BKM Capital Partner’s private and institutional investors. With a focus on “boots on the ground” execution at the property level, BKM has in-house capabilities for both property management and leasing. The teams at the property level are focused on ensuring the tenants thrive and that the properties are managed in the most efficient way.

 

 

 

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