Looking Into the 2017 Real Estate Economy
Per the Kiplinger Letter January 13, 2017, Real Estate agents and Investors need to be on the lookout for vacancies to grow in the retail market sector. Retailers that have brick and mortar shops are finding it difficult to compete with e-commerce. Some retailers such as Macys, Sears, and Kmart are already announcing store closings. Investors need to keep a sharp eye out for these types of closings, which drive vacancy rates up. The local Research Triangle Park and the surrounding Raleigh markets will be affected by this trend. Restaurant chains are slowing down on opening new locations. This will only increase the already existing retail market vacancy rate issues. Overall, expect vacancy rates to drop from its current 15.7% in 2016.
With the predicted business sector uptick, there will be a need to hire new employees. Investors should prepare for a high need for office and technology space in 2017. RTP is already showing the need for more business and tech space.
The Kiplinger Letter on January 13, 2017 echoed that while we should be ready for a steady economy for 2017, we should not except it to “wow” us like some have predicted. The market says the GDP should grow, but only about 2.1%. If this occurs, it will be a growth year, as 2016 topped out with a GDP of around 1.6%.
One of the largest drivers of the GDP is consumers who are willing and able to spend. Consumers account for about 69% of the national GDP.
Last year wages grew about 2.6%; this year the prediction is that wages will grow about 3%. With wages still growing, households are beginning to climb out of debt, which means more families will have room to take on more debt. Their loan-to-values and income ratios will begin to balance out.
Residential new construction is projected to increase about 10%. Inventory of new homes will still remain limited throughout the year.
All this to say: be careful on bold aggressive business decisions in 2017.