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Debt Capital, Foreign Investment To Remain Widely Available For CRE In 2017

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Experts are watching to see if President-elect Donald Trump’s future policies will impact the economy as projected.

Foreign money

Most estimates regarding fiscal stimulus from corporate tax cuts, lending deregulation and the like are still a bit premature, experts say, but financial markets are optimistic the president-elect and his Cabinet picks will mean good things for the American economy.

"With the Trump administration, our view is that there are a lot of very knowledgable commercial and multifamily people that are going to be in his Cabinet or filling key roles in the Washington scene," CBRE’s Brian Stoffers, global president of debt and structured finance, told Bisnow. "For example, Steve Mnuchin and Jared Kushner have extensive experience in our sector and are probably acutely aware of the over-regulation that has taken place since the financial crisis. [They] may help us make headway with some of that over-regulation."

The capital market outlook is particularly favorable this year, as debt is expected to remain widely available while foreign capital floods the market — with China leading the way.  

Foreign Investment

Foreign investors often turn to the U.S. property market for safety, particularly those countries facing volatility and a scarcity in yield returns in their own markets. CBRE predicted a shift in investments depending on the health of the sector. Though gateway markets such as New York and San Francisco will remain popular, secondary markets like Dallas-Fort Worth and Atlanta are expected to gain traction with foreign investors this year, particularly in the office and multifamily sectors.

Financial Markets, Bonds, Stock Market

“We believe there will be ample capital available throughout 2017, though there are a couple of headwinds,” Stoffer said. “Construction lending will remain tight for banks and CMBS will continue to muddle along … But on the positive front, we think debt funds will continue to expand and fill in some of the voids.”

GDP Expansion

Commercial real estate firms remain optimistic regarding the CRE outlook, with several firms revising their GDP estimates upward in response to Trump's business-friendly agenda. Cushman & Wakefield anticipates GDP to grow by 2.3% this year, hitting 3% in 2018 and creating more than 3 million new jobs within the next two years. CBRE has raised its forecast for economic growth to 3.5% from its pre-election forecast of 2% to 2.5% economic growth.

The clock is ticking as we approach the Jan. 20 presidential inauguration ceremony, but experts say we’ll have to wait at least half the year to truly be able to assess his impact.

“From a macroeconomic perspective, people are understanding that it may take six months to sort through any kind of growth impact,” Yardi Matrix VP Jeff Adler told Bisnow. “I know our projection for 2017 is a 3.9% overall annual growth rate.”