Coming off of an unprecedented four years of growth, new commercial construction nationally is expected to continue for the duration of next year, although perhaps at a less frantic pace.
According to a new report issued by the Los Angeles-based CBRE Group, new office construction is forecast to outpace net absorption in 2020, meaning that there is likely to be a marginal increase in the national vacancy rate.
The report, 2020 U.S. Real Estate Market Outlook, is also projecting a 13 percent growth in the flexible office sector - a strong increase - although less than the 23 percent increase recorded this year.
Overall, office space completion will decrease next year to 51.1 million square feet, down from this year’s 56.4 million square feet.
The CBRE report expects to see more developers reconverting existing mall space into mixed-use complexes, with the increased building-out of health and wellness operations in those spaces.
Multi-family construction is also slated for continued growth, even though there will be “some cooling due to new supply outpacing demand.”
Increased investment is also expected in the data center, senior housing, student housing, and self-storage construction segments.
Although total dollar construction volume should come in anywhere between $478 billion and $502 billion, the building market is likely to be negatively impacted by continuing doubts regarding international trade negotiations as well as a recent weakness in the manufacturing sector.
The CBRE Group is the largest commercial real estate services company in the world with revenues last year in excess of $21 billion.
By Garry Boulard
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