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OUR COMPANY AFFILIATES

CBRE GROUP

CBRE Group, Inc. is the world’s largest commercial real estate services and investment firm, with 2017 revenues of $14.2 billion and more than 80,000 employees (excluding affiliate offices). CBRE has been included in the Fortune 500 since 2008, ranking #207 in 2018. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.

INVESTMENT SERVICES

CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers with $105 billion in assets under management.

Built up over more than 40 years, our unparalleled platform is focused on real assets, giving our institutional clients access to real estate and infrastructure in the Americas, Europe and Asia Pacific. Our clients benefit from a complete range of investment solutions including equity and debt, direct and indirect, and listed and unlisted strategies.

Trammell Crow Company, founded in Dallas, Texas in 1948, is one of the nation’s oldest and most prolific developers of, and investors in, commercial real estate.The CBRE Global Investors and Trammell Crow Company platforms make up the Real Estate Investments division of CBRE Group.

The Real Estate Investments division is led by
Danny Queenan, Global CEO, Real Estate Investments.

BLOGS

Regularly released content on the state of the real estate and infrastructure industry are produced by our subject matter experts and shared on their blogs. A selection of them can be found below.

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AMERICAS WATCH

The transition from 2018 to 2019 has been a wobbly one for the U.S. economy. A few months shy of earning the sobriquet of the longest economic expansion, there are fears of its derailment. Although no meaningful signs point to that outcome in the near term, there are some weaknesses in the manufacturing and housing sectors. Due to the partial government shutdown in December ’18-January’19, the release of many of the economic indicators has been delayed, muddying the waters and making it harder to get a good read on the state of the economy. That, in addition to the equity market correction in Q4 2018, have had knock-on effects on business and consumer sentiment. Impacts of the tax cuts, already less positive and meaningful than anticipated in jumpstarting productivity and investment, are fading. However, there are no major imbalances in the economy as the labor market remains healthy and wages continue to grow. Caution and concern are not unusual at this stage of an expansion, but an accommodative Fed and no inflationary headwinds bode well.

BUSINESS CONFIDENCE DEFINTELY NOT LOOKING FORWARD

Business confidence appears to be eroding as company leaders are concerned by a combination of economic and financical indicators. A volatile stock market, ongoing trade disputes, and the possibility of further rises in interest rates have been consistent headlines over the last few months. Moreover, concerns have emerged over a deceleration in the global economy, notably led by lower production out of China as the trade war with its largest trading partner, the U.S. The latest recorded figure and 6-week moving average for the Moody’s Business Confidence Index dropped to the lowest level since October 2012. Although this reading shows an anticipation that the economy may be slowing, most measures of economic performance such as GDP growth and employment levels remain strong.

MARCH 2019

2,784.49

3.0%

S&P 500

2.25-2.50%

Fed Funds Rate

2.72%

9 bps

10-yr. T-Note

$55.80

3.7%

Oil*

*WTI Crude Oil Spot Price. Data points through end of February 2019. Change represents month-over-month change.

BUSINESS CONFIDENCE

Source: Moody’s Analytics

PRINCIPAL CONTRIBUTORS:
 
Shubhra Jha
Jeremiah Lee
Rene Moreira
Joey Valenzuela
IMPROVING OUTLOOK FOLLOWING RECENT LULL

Following a lackluster end to 2018, a trend driven by heightened financial market volatility and, at one point, a seemingly inevitable trade war with China, manufacturers and service-sector employers appear to have regained confidence. This is indicated by the gains in both the ISM Manufacturing and Non-manufacturing indices through February 2019. Despite the the recent pause and expectations for slowing growth moving forward, both indices remain well above 50, suggesting that the prolonged economic expansion has room to run.

ISM INDICES
Source: Institute of Supply Management
DEMAND AT HOME AND ABROAD MODERATING

The healthy U.S. economy continues to drive consumption for foreign goods, but a deceleration in economic growth abroad has slowed demand for U.S. made goods. Additionally, the ongoing speculation in how trade talks with China will finalize has not helped quell growing uncertianity. While U.S. exports were flat in 4Q2018 from the previous quarter, they still witnessed healthy 4.4% growth from the same time last year. Appetite for imports also continued to rise from last year, but at slightly moderate pace compared to growth rates seen over the last 24 months. Although a strong dollar and healthy consumer confidence will continue to support overall trade volumes in the near term, an upcoming trade resolution between China and the U.S. must be monitored.

EXPORTS VS. IMPORTS
Source: U.S. Bureau of Economic Analysis
FIXED INVESTMENT SLOWS TO END 2018

Real private fixed investment increased at an annualized rate of 4.0% in the fourth quarter, an improvement from the previous quarter but a deceleration from investment growth through the first half of 2018. Non-residential fixed investment, led by gains in equipment spending, increased by an annualized rate of 6.2% in 4Q18, overshadowing the decline in both non-residential construction and residential investment.

BUSINESS INVESTMENT
Source: U.S. Bureau of Economic Analysis
STILL ROOM TO SPREAD THE LOVE?

The spread between corporate and 10-year treasury bond yields from February to November of 2018 steadily increased to their long-term average after two years of steady compression. The expectation of more rate increases at the Fed in response to a robust fiscally-stimulated economy were posing questions of investors- where do things go from here? Although spreads have surpassed their long-term average, the current delay in more rate increases, combined with the healthy state of the U.S. economy, means spreads should moderate in the near term. Expectations of corporate earnings over the same time should remain in the balance as exemplified by the rebound in equity markets from the 30% market correction in December of 2018.

CORPORATE BOND-TREASURY SPREADS
Source: Thomson Reuters
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This information is for our clients and investors only. Please note that the content of this report is for informational purposes only and should not be viewed as investment advice or an offer or solicitation. Any opinions are solely those of the Strategy & Research Team of CBRE Global Investors and are subject to change without notice, and may not be consistent with market trends or future events. This research is based on current public information that we consider reliable, but we do not represent it as accurate, updated or complete, and it should not be relied on as such.

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