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Growth Outlook for Values is Best for Prime Industrial

Class A industrial assets in primary markets are best positioned for growth in both values and rents over the next 12 months, according to the latest U.S. survey from the Royal Institute of Chartered Surveyors (RICS).
The annual increases in the 3% range forecasted by survey respondents occur against a broader backdrop of “generally solid” sentiment in the real estate market, RICS says.

The outlook for rent growth in prime industrial is marginally better than that for prime office, while valuation growth projections for prime office lag those of prime industrial.

Both asset classes, though, outperform either prime or secondary retail, where expectations call for negative growth over the next 12 months, especially for secondary retail. Multifamily is not included in the quarterly RICS U.S. Commercial Property Monitor surveys.

Generally speaking, according to RICS, “the majority of contributors to the survey (41%) view the market to be in the peak phase of the property cycle.” Accordingly, more than half the respondents in the first-quarter U.S. survey said that properties have become expensive relative to values.

That being the case, U.S. survey respondents ranked behind their counterparts in Germany, France, Japan, Canada and Hong Kong, among other markets, in terms of saying that commercial properties were overpriced.

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About Paul Bubny

Paul Bubny serves as Senior Content Director for Connect Commercial Real Estate, a role to which he brings 13-plus years’ experience covering the commercial real estate industry and 30-plus years in business-to-business journalism. In this capacity, he oversees daily operations while also reporting on both local/regional markets and national trends, covering individual transactions across all property types, as well as delving into broader subject matter. He produces 15-20 daily news stories per day and works with the Connect team and clients to develop longer-form content, ranging from Q&As to thought-leadership pieces. Prior to joining Connect, Paul was Managing Editor for both Real Estate Forum and at American Lawyer Media, where he oversaw operations at both publications while also producing daily news and feature-length articles. His tenure in B2B publishing stretches back into the print era, and he has served as Editor in Chief on four national trade publications. Since 1999, Paul has volunteered as the newsletter editor of passenger rail advocacy groups (one national, one local).

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