42 / 114
42 The US-Israel Legal Review 2019
US: REAL ESTATE
2018
was another strong year for global
commercial real estate markets with
several exciting developments in the US CRE space,
including a flurry of opportunity zone activity,
impacts fromtheTaxCuts and JobsAct, big corporate
headquarters announcements and continuing
growth of e-commerce and the sharing economy.
2018 beat 2015 as the best year of the current cycle
for global CRE investment, with the US leading the
pack at 52 percent of global volume and 15 percent
growth in annual investment volume.
1
Yet 2018 also was the worst year for US stocks
since 2008. Market uncertainty about trade
relations, monetary policy, inflation and regulation
of the tech sector drove substantial volatility in
US equity markets. By the end of 2018, the Dow
had fallen 5.6 percent, the S&P 500 was down 6.2
percent and the Nasdaq fell 4 percent. It was in this
environment that respondents opined on the state
of US and global real estate markets in DLA Piper’s
annual
State of the Market Survey.
Only 42 percent of respondents in this survey
said they were bullish about the CRE market, a
significant drop from the 60 percent who were
bullish in 2017. This is the third consecutive
decline in confidence levels among respondents to
DLA Piper’s survey and the first time a majority
of respondents have felt bearish since 2011. Since
the close of the survey, the Dow saw a rise of 7.2
percent, the best January since January 1985
2
and
the Federal Reserve announced that it would take a
“wait and see” approach to interest rate hikes.
3
However, survey responses to numerous
questions demonstrate that any optimism in the
CRE market is fragile, with three data points
standing out alongside the topline bullish vs.
bearish numbers:
• Nearly one-third were concerned by domestic
political and geopolitical issues, reflecting broad
cross-industry jitters over policy uncertainty.
• 28 percent noted inevitable market correction
as the reason for their doubts.
• 90 percent believed interest rates are on the rise.
This builds on the previous survey’s conclusion:
the good times are rolling – but for how long?
Despite a trend toward bearishness, however,
signs of dynamism are still evident. Survey
With record commercial real estate transactions, have we
peaked? Or will the positive trends continue in 2019?
Jay Epstien provides some answers.
US Commercial Real Estate
Transactions: Trends for 2019
Only 42 percent of respondents
in this survey said they were
bullish about the CREmarket,
a significant drop from the 60
percent who were bullish in 2017.