Speaking at a recent NAIOP conference, JLL Capital Markets Managing Director Frank Petz characterized the current market as “heated, with no sign of cooling down.” Among the highlights, current pricing is way above the prior peak in 2007, for both Class A and Class B properties. On top of that, multifamily in particular is having a record year for Boston sales volume, far outpacing its previous high in 2007.
But all that begs the question, what happens next year? Here are Frank’s 6 predictions for 2016:
- Sales volume good, but $ down 10-20%.
- Continued value appreciation will tempt even long-term holders.
- Core remains core – partial interests increase.
- Cap rates upward pressure (interest rates); but value growth continues (rents).
- Wrong buildings / wrong locations – pricing fragile.
- Multifamily – Class A supply impacts short-term rent growth. Cap rate inflation.
Feel free to contact Frank with questions or for more information.