The Changing Landscape for Small Cap Markets

Posted on June 27, 2017

Commercial real estate is at the crossroads of major global changes. A variety of factors are impacting the industry, from moderate macroeconomic growth and space utilization shifts to changing interest rates and record pricing. Global economies have experienced noticeable slowdowns over the past couple of years, leading many central banks to resort to easing monetary policies, which put interest rates at or near zero. The United States economy, while also moderate, has maintained an upwards growth trajectory, which has cast it as a comparative bright spot in the gloomy global economic landscape.

Commercial real estate investment trends mirrored the global economic slowdown and broader uncertainty over the past year and a half.  Investors took a pause from the strong pace of investments recorded in 2015 as they weighed the impact of economic and geopolitical changes upon markets. Commercial investments in the U.S. echoed the global trends, with sales volume in large cap[i] markets closing the year at $488.6 billion, an 11 percent decline on a yearly basis, according to Real Capital Analytics. The first quarter 2017 sales volume came in at $94.8 billion, an 18 percent drop year-over-year.

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