Expectations and Market Realities in Real Estate

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As a historically long commercial real estate cycle reaches its peak, fundamentals have endured. Additionally, a tight labor market that is supporting higher wages and increased consumer spending will help drive demand for all commercial property types and support the income component of total returns. Domestic and foreign policy uncertainty is likely to remain at the forefront of investors’ minds, leading them to be more concerned about protecting the value of their assets from external forces. 

Despite the expected decline in total returns over the next year, Commercial real estate is likely to continue to be a preferred asset class because of its favorable return vs. risk profile, offering investors stability in the risk environment.