Many of my clients are asking what I think will happen in the market next based on Brexit. Locally we are still seeing a healthy market with rents rising, vacancy diminishing and prices continuing to increase. It is a great time to be a seller of multifamily properties: some sellers are using the profits from this market to leap frog into single tenant properties with solid long term leases that are corporately guaranteed. We are seeing a healthy, robust retail market right now and tenants’ occupancies remain strong. Hope you enjoy this great article on Brexit and how it may impact the US in the coming months.
US Commercial Real Estate Markets After BREXIT – SVN
Immediate effects of the vote were volatility in the equity markets. Author Kevin Maggiacomo notes that:
…markets have been volatile with rapid downside moves while perceived “safe” assets such as gold and US Treasury bonds soared in price…
But, with particular implications for the real estate markets, he adds:
REIT stocks, perhaps a leading indicator of the market reaction and a flight towards the tangibility of commercial real estate, have fallen less than the market averages in the days since the BREXIT.
While all the effects of the vote are not yet know, Mr. Maggiacomo suggests that there are three certainties, saying:
The UK will suffer from the uncertainty in the short term and probably the long term, assuming Parliament moves forward with the voters’ wishes.
…a flight to Dollars from Pounds and Euros, should persist for some time, with higher volatility of course.
Interest rates in the US are likely to remain low. The “flight to safety” has made US Treasury bonds of all maturities very popular and thus yields are likely to stay low for some time.
Mr. Maggiacomo feels that “while the jury is still out on the final impacts to the US economy and real estate markets, most noted economists believe that BREXIT will have relatively minimal impacts” and, more importantly, that “commercial real estate in the US is most likely to benefit based on what seems probable at this time. Investors seeking yield and safety will find that our real estate assets are a relatively safe place to park capital.”
Give me a call today and let’s discuss how investing in commercial real estate might just be the ticket for you!
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