Lagging Indicators
As Europe continues to struggle in commercial real estate development, the outlook for new projects across the Atlantic is much brighter. In 2017 the U.S. economy grew by 4.1% to a GDP of U.S. $19,390.6 billion. Gross domestic product (GDP) measures national income and output for a given country’s economy. The GDP of the United States represents 31.28% of the entire global economy…one third! Average GDP in the U.S. between 1960 and 2017 was $6,991.5 billion, from a low of $543.3 billion in 1960 to an all-time high of $19,390.6 billion in 2017. By stark contrast the entire Euro Area only grew by 0.40%, or $12,589.5 billion, similar to results in China.
The United States has had major growth in commercial building and manufacturing, and will continue to enjoy favorable conditions for some time. Housing starts have leveled off a bit, but the forecast looks positive. Many communities have vacancy rates as low as 10-15%, with commercial even lower. The self-storage industry has continued to fare well in the current market climate, consistently reporting new development. The industry has sought to round out portfolios by adding self-storage properties, which generate higher returns than traditional tenant based properties. Markets have stabilized and investors looking for an entry point should consider taking advantage over the next few quarters.
