JOSEPH MANASSERI, EXECUTIVE MANAGING DIRECTOR OF ASSET SERVICES FOR CUSHMAN & WAKEFIELD, AMO (New York tri-state region), agreed that the
overall picture is favorable, but advised that multifamily
growth probably peaked this year. The coming year, he said,
will see a slowdown of permits and new construction, particularly in Class A, which developers believe is overbuilt.
“In contrast,” he said, “industrial property is very strong
and will continue to be so into 2018, especially on the coasts.
Office is a mixed bag, depending on where you are. We see a
lot of uncertainty going into 2018.
“Real estate services companies have an opportunity to
differentiate themselves. Cushman & Wakefield looks to
maximize the efficiencies in our owners’ buildings, minimize
costs and create value. We manage nearly 100 million square
feet for investor and owner occupier clients in the Tri-State
area, and owners are looking to us to understand their in-
vestment criteria and help them maintain and expand, in an
environment where cap rates are compressing and interest
rates are rising.”
Institutional investors tend to be long-term holders, Manas-
seri said, while other investors are looking for the right time
to sell and move on. In multifamily, markets are changing
and are sometimes hard to read.
“Los Angeles is one of the strongest this year, with a significant jump in housing construction,” he said. “I see positive growth in San Francisco. In New York City, Brooklyn
and Long Island City, the multifamily construction is so impressive, but I’m not sure that it’ll carry over to next year.
Demand is peaking now. You won’t see as many permits, as
many cranes in the sky.
“Given the shifting market dynamics, it’s a prime time to
be in the property management business, to help owners solve
problems and create value. The multifamily lending markets
will be somewhat cautious and selective, but the core markets
will remain strong performers. If we continue to have job
growth, we’ll have absorption, especially where there’s good
public transportation and a strong amenities base.”
GREG WILLETT, CHIEF ECONOMIST AT REALPAGE, a
property management software company based in Richardson, Texas, said “stabilization” will be a key word for
2018. Real estate is past its peak performance for this cycle,
but the overall numbers are healthy. Some of the premier
headline-grabbing markets, especially on the coasts, that got
so much attention in the early phases of the cycle will slow
down, because so much product has been delivered and costs
of construction have run up.
“The next tier of markets—Texas, the Carolinas, some of
the Southeast—is where you see the strongest performance
today,” he said. “For a while, it’s been the old story of the
rising tide lifting all boats. Now, the story is still favorable,
but you have to work harder to get top performance.
“We’re in a situation now where markets are incredibly
segmented; you have to know your market and your renter
base. In multifamily, the top end of the food chain has a more
competitive environment because the new product is almost
all Class A. Demand for that product is still high, but it’s di-
vided by so many new properties coming on line. The middle
market is still tight. We probably will hit peak deliveries this
calendar year, with next year slightly lower, but not much.
The employment growth numbers this year have been sur-
prisingly strong, and demographics point to slightly slower
net growth in the number of working-age people.”
On the whole, the numbers are healthy, and steady growth
is the most likely outcome, Willett said. “I foresee slow in-
creases in interest rates, which should be absorbed with no
is very strong and
will continue to
be so into 2018,
especially on the
“I foresee slow
which should be
absorbed with no