Nationally, nine years into the expansion economists expect a jump in economic growth in 2018. Real gross domestic product (GDP) growth, which was 2.3 percent in 2017, is forecast to rise to 2.8 percent in 2018. Higher levels of economic growth are anticipated to continue into 2019 with economists predicting a 2.5 to 2.9 percent GDP growth rate.
- According to the MBA, 2017s lending volume for commercial and multifamily mortgage loans closed at a record of $530.1 billion, up eight percent over 2016. Nearly a third of that total, or $151.2 billion, reportedly came from commercial banks, while GSEs came in second with $130 billion.
- Commercial real estate loans at banks are at a record of $4.3 trillion, or 11 percent higher than before the Financial Crisis. According to the Green Street CPPI index commercial real estate prices collapsed nearly 40 percent during the Financial Crisis; then prices more than doubled from the low in May 2009 to the peak in September 2017, when the index was 27% above the peak of the prior bubble.
- Economic growth and commercial real estate fundamentals overall remain strong. The exception is the retail sector due to changing demographics, the impact of E-commerce and tenant bankruptcies.
- But the “retail apocalypse” isn’t occurring and facts and figures tell the story: 91 percent of all retail sales in 2017 occurred in a brick-and-mortar stores and physical retail store openings grew by more than 50 percent in 2017 thanks to the hypergrowth of dollar stores.
- The outlook for commercial real estate in 2018 is positive based upon continued low unemployment and positive economic growth even with the headwinds of rising interest rates.
Locally, we have summarized several larger priced commercial property sales that occurred in the first quarter of 2018 below.
- One & Two Greenville Crossing – is a 134,389 square foot retail/office complex located in Greenville that sold for $66 million in March 2018.
- The Alder Park & Pine Grove Apartments – in Dover that total 311 units sold in January 2018 for $20 million, equivalent to $64,102 per unit.
- Las Casas Apartments – in Wilmington sold for $10.3 million in March 2018, or $85,833/unit.
- Walgreens in Milford sold in March 2018 for $6.575 million, or a $526/SF and a 5.7% cap rate.
- 322 Ruthar Drive – is a 120,700 square foot industrial building on 10.67 acres that sold in April 2018 for $6.5 million, or $53.85 per square foot.