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Cushman & Wakefield’s latest Macro Report for 2016 highlights that the U.S. economy faced some very difficult headwinds in the first half of 2016, mostly coming from overseas. In particular, the report identified that the financial markets were rocked at various points this year by several factors including China’s decelerating economy, weakness in the emerging markets caused by a long-term slump in commodities, and more recently, Brexit. “Throughout all of these challenges, the U.S. economy has remained impressively resilient,” the study also noted. “The key demand drivers that support the property markets—consumer confidence, job growth, low interest rates and consumer spending— all remain firmly intact. The outlier, once again, is GDP. Real GDP grew by a meager 1.0 percent in the first half of the year, well below its potential growth rate which is commonly believed to be closer to 3 percent.”

Seven Years of Expansion Still Going Strong…

  • The U.S. economic expansion weathered the global shocks and remains on solid footing
  • Low oil prices, rising wages, and improved job security—consumers are well positioned to power growth
  • Brexit is proving to be a regional shock, so far, and may create additional tailwinds for the U.S. • Leasing fundamentals continue to tighten across most product types and geographies, rent growth is accelerating
  • Sales volume slowing to a more sustainable pace; pricing is holding up well
  • Returns moving lower, but still attractive compared to other asset classes


*Cushman & Wakefield


The firm also predicts in the report that business investment will improve and contribute positively to stronger economic growth in the second half of 2016 and more so in 2017. “Consumer spending will continue to power the broader economy. Personal consumption expenditures will grow by 2.5 percent in 2016 and 2.7 percent in 2017. Net exports will put pressure on overall growth as exports fall year-over-year in 2016 before rebounding by 1.1 percent in 2017 as global growth improves.”


Warehouse and distribution space will continue to benefit from empowered consumers and from the continued growth of eCommerce; at the same time, flex/R&D space will benefit from solid gains in high-tech employment sectors, notes Cushman & Wakefield. The report also sees manufacturing, which has faced headwinds from international pressures since mid-2014, to get some reprieve as industrial production, factory orders, and investment begin to turn the corner starting in the second half of 2016. “Warehouse/distribution space accounts for over 60 percent of industrial inventory, making consumer health more vital than ever to this supply chain-centric product. We anticipate spending on nondurable goods will increase by 2.5 percent this year before rising to 2.8 percent next year.”


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