Could 2020 Be Record-Breaking Year for Commercial Real Estate?

November 26, 2019

Despite some economic headwinds, U.S. commercial real estate could be on track to have a stellar 2020, according to a new report from CBRE, a commercial real estate servicer and investment firm. CBRE predicts “one of the strongest years on record” for the commercial real estate industry.

The sector could see between $478 billion and $502 billion in investments in 2020. That would put it on par with the prior two years, outpacing previous years.

The prediction includes money that would go toward multifamily housing, retail, data centers, office space, industrial buildings, and more.

“Amid slower economic growth and global uncertainty, U.S. commercial real estate will remain a haven for investment in 2020,” the CBRE report predicts.

CBRE researchers cite low inflation, low interest rates, strong consumer spending, and increased capital flows into the sector as reasons for their bullish forecast for 2020.

“Barring any unforeseen risks, we assess that a recession will be avoided, thanks in large part to the stimulatory effects of the Fed’s rate cuts in 2019,” CBRE notes. Still, CBRE predicts “tempered growth” in the market due to uncertainty over trade negotiations, weakness in manufacturing, and the upcoming presidential election.

“Next year will bring deceleration on a few fronts, but this still is an expanding economy and a flourishing property market,” says Richard Barkham, CBRE's chief economist and head of Americas research. “We'll see resilience across asset classes such as office, retail and multifamily as demand continues to buoy those sectors. And we see transaction volumes and capitalization rates staying relatively stable.”