The economic outlook for the U.S. economy remains generally favorable. While we will have to wait until late July for the first read of Q2 2017 GDP, many economists are expecting GDP growth to accelerate from a sluggish Q1, which showed expansion of 1.4%. Equity markets rest near record highs and the ISM Manufacturing and Non-Manufacturing indices have been particularly strong in recent months. Although retail sales showed the largest decline in 16 months in June, retail sales year to date compared to a year ago demonstrate sufficient forward momentum. That being said, while there are no panic alarms brazenly flashing regarding commercial real estate, developments in 2017 have resulted in some caution. The availability of commercial real estate loans have tightened on net during the last nine months, particularly for multi-family and development financing. While treasury yields have come down from recent peaks, they are still notably above pre-election rates and the Fed has also raised base interest rates for the second time this year. These two developments could eventually lead to moderate upward pressure on cap rates, which are largely near cyclical lows for most property types and/or markets.
Source : CBRE Global Investors