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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 2018 revenues of $21.3 billion and more than 90,000 employees (excluding affiliate offices). CBRE has been included in the Fortune 500 since 2008, ranking #146 in 2019. 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 $106 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

Positives to propel the current economic expansion are becoming harder to find, while political risks now rise to the fray. As news headlines focus daily on the possible impeachment inquiry, less attention has been given to the continued softness in multiple economic indicators. Business investment and confidence continue to slide as concerns of a slowing global economy increase and the U.S.-China Trade War rages on. The rising uncertainty has crept into the labor market as employment gains since midyear 2019 have decelerated from their average pace over the last 12 months. Additionally, even the strongest facet of the U.S. economy, the consumer, is losing confidence, and sentiment is slowly eroding. The negative momentum has led the Federal Reserve to cut its central policy rate by another 25 basis points, which concurrently also took place in a temporary credit crunch in the repo markets. However, despite the negatives, the economic landscape still has some positives. Unemployment remains near a long-term low, wages continue to see healthy gains and lower interest rates should boost housing demand. These positives should also provide some near-term momentum for the consumer as we head into the busiest shopping season of the year. As for commercial real estate markets, investors anxiously await third-quarter statistics for any signs of uncertainty spilling over into the property markets.

LABOR MARKET COOLING

The pace of hiring has cooled, not an unexpected development as business and consumer confidence appears to be shaken given the uncertainty surrounding trade policy and the further path of economic growth. Payroll gains have slowed to an average of 158,000 jobs per month in 2019, down about a third from the same time last year. Supply constraints and rising costs, in conjunction with fading fiscal stimulus and trade uncertainty, will continue to weigh on hiring plans. On a positive note, unemployment insurance claims remain historically low, signaling that firms have not resorted to layoffs to deal with slowing economic growth. Other positive signals include an increase in the labor force participation rate, up 50 bps from a year earlier and a steady 3.7% unemployment rate for the third straight month.

OCTOBER 2019

2,976.74

1.7%

S&P 500

1.75-2.0%

25 BPS

Fed Funds Rate

1.68%

18 bps

10-yr. T-Note

$53.98

2.0%

Oil*

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

NON-FARM EMPLOYMENT & UNEMPLOYMENT
PRINCIPAL CONTRIBUTORS:
 
Shubhra Jha
Jeremiah Lee
Rene Moreira
Joey Valenzuela
GDP GROWTH REMAINS MODERATE

The U.S. economy grew at an annual rate of 2.0% between April and June (Q2 2019). The slower pace of growth was mostly driven by a sharp contraction in private business investment that is being blamed on the ongoing trade war with China. Net-exports also negatively contributed to GDP as the U.S. manufacturing sector recorded a poor quarter. Non-defense government spending positively contributed to the nation’s GDP, but less than the stellar contribution from consumer spending which recorded its highest level of annualized growth in 4-1/2 years. Although the ongoing trade war with China is concerning for some sectors, the U.S. economy is expected to continue expanding at a moderate pace.

CONTRIBUTIONS TO REAL GDP
Source: U.S. Bureau of Labor Statistics
CONFIDENCE SLIPS

A reflection of the heightened uncertainty in the current economic landscape, consumer confidence levels fluctuated in recent months, falling to 125.1 in September 2019 after nearing cyclical highs in prior months. Signs of slowing economic growth in international markets, rising trade tensions and the lingering Brexit fight are at odds with signals of continued growth domestically. Despite this recent drop, consumer confidence remains well above its long-term average, an indication of the still positive, but diminishing, optimism among U.S. consumers.

CONSUMER CONFIDENCE
Source: The Conference Board
CONSUMPTION CONTINUES

Supported by the tight labor market, improved wage growth, and recent stock market performance, retail sales remained healthy into the final half of 2019, increasing by 3.5% y-o-y in August 2019. Although the pace of retail sales has receded in comparison to 2018, its continued rise has counterbalanced weakness in other segments of the economy, namely manufacturing and business investment.

RETAIL SALES
Source: U.S. Census Bureau
LOW RATES BOOST U.S. HOUSING MARKET

Low unemployment and near historic low mortgage rates have stimulated the sluggish U.S. housing market in recent months. The average rate for a 30-year fixed mortgage fell below 4% in May, leading to an uptick in the number of U.S. home sales. The growing number of home sales has encouraged the nation’s homebuilders to proceed with new projects as evidenced by the number of new housing starts reaching their highest level since mid-2007. Despite the uptick in new home starts, the months-of-supply for new homes has continued to decline. In the coming months, the U.S. housing sector is set to benefit from lower interest rates and increased sales activity.

HOUSING MARKET
Source: U.S. Census Bureau
Related Content

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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