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Investment outlook

U.S. real estate 2019 outlook

Melissa Reagen
Managing Director, Head of Research, Real Estate, Americas
New York

The U.S. economy and labour markets have been growing robustly in 2018 due to tax cuts and fiscal stimulus passed at the end of 2017. With unemployment at its lowest rate for a decade, consumer confidence is at its highest level for 18 years. This provides a sound foundation entering 2019, with GDP growth forecast to be 2.6% for the year. Rising interest rates have not slowed real estate investment volumes, and with solid fundamentals in place - a healthy demand supply balance - we expect the yield cycle to last another year.

However, we don’t anticipate any yield compression in 2019 with returns being largely driven by income. We expect the structurally-driven sectors of logistics and apartments - underpinned by e-commerce and demographics, respectively – to outperform. Office and retail, to a greater extent, are likely to fall further out of favour during the course of the year.