The growth momentum of 2017 leading into 2018, measured by above-average GDP growth, solid employment gains and rising consumer confidence, was quite impressive given that it was year eight of the expansion. However, seasonality in Q1 2018 data makes it difficult to truly assess the health of the economy and its impact on the CRE sector. Measures for GDP and the labor market continue to surprise on the upside, a good start to year nine of the cycle. Over 605,000 jobs were added in Q1 2018, 14% higher than Q1 2017. With more fiscal stimulus on the way and wage gains picking up steam, more workers who are sitting on the sidelines are likely to re-enter the labor force. However, occupier demand is yet to show up in the data, which has been a mixed bag across the different sectors. The office and retail sector woes appear to be here to stay, as tenants seek efficiencies in the new rapidly changing world they inhabit. On the other end of the spectrum, the performance of the industrial and apartment sectors, though a bit softer than the year prior, is on track for another good year. As the year unfolds, stay tuned for these trends to reinforce themselves, with a surprise or two thrown in.
Source : CBRE Global Investors