Shilling: No Need to be Defensive About CRE Markets

Even as the length of the current cycle reaches a record duration, and is causing some to be less bullish, it’s not time to be defensive about commercial real estate markets. That compelling view was offered by James Shilling, the George L. Ruff Endowed Chair of the Department of Real Estate at DePaul University, while speaking at the 15th Annual REIA/DePaul Fall Summit in Chicago.

“Real estate fundamentals are solid for most property types, but potential appreciation is limited and is unlikely to pick up as the real estate cycle matures and as bull investors become bears,” Shilling said.

Shilling told the crowd in attendance that the probability of a decline in real GDP in the next quarter is low, around 15%. By 2021, that probability increases to nearly 75%. Shilling also noted that this economic cycle doesn’t have to end just because we are reaching a record number of years of growth. He cited the Australian economy, which has been in growth mode for three times as long as the U.S. economy.

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