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LaSalle Predicts Strong Performance for Both U.S., Canadian Real Estate into 2020

Strong performance is expected for both the U.S. and Canadian real estate markets in 2019 and into 2020, as fundamentals will continue to exhibit stability amidst a chaotic political climate and economic cycle, according to LaSalle Investment Management’s Investment Strategy Annual (ISA) 2019. This stability does not extend to every facet of either market, but core values will demonstrate resilience, despite the potential challenges of inflation and late-cycle anxiety that have permeated the North American economy.

In order to mitigate these potential risks, LaSalle recommends the institutional investors construct real estate portfolios that employ defensive (low beta) positioning, while still dedicating a portion of investment to higher (alpha-seeking) return strategies.

LaSalle’s Bill Maher says, “Late-cycle investing requires higher degrees of both caution and conviction to keep a real estate portfolio performing at a high level.”

Key LaSalle report findings:

– Job growth will continue to support real estate demand, although the pace of growth will slow as shifting demographics limit the growth of the working age population and lower the unemployment rate.
– The U.S. Federal Reserve is on a path of measured interest rate increases, and the federal funds rate approaching 2.5 percent, up from effectively zero. Short-term and long-term interest rates are also climbing, with the 12-month LIBOR up almost 200 basis points and the 10-year Treasury note increasing– but thus far, the increases have not been enough to move real estate pricing materially.
– Higher interest rates could trigger changes in 2019-2020, as some capital sources move away from real estate towards fixed income alternatives. However, this will not be a rapid shift – many investors hold real estate as a long-term investment, and do not adjust real estate allocations quickly.
– Domestic buyers remain active but tilt towards higher return strategies in order to meet absolute return objectives, while foreign buyers have curtailed their activities, for many due to the costs of hedging their currency exposures.
– New supply poses a potential cyclical risk. Secular risks will also continue to influence real estate markets.

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For comments, questions or concerns, please contact Dennis Kaiser


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About Dennis Kaiser

Dennis Kaiser is Vice President of Content and Public Relations for Connect Commercial Real Estate. Dennis is a communications leader with more than 30 years of experience including as a journalist and in corporate and agency marketing communications roles. He is responsible for Connect’s client content operations and is involved in a range of initiatives ranging from content strategy, message development, copywriting, media relations, social media and content marketing services. In his most recent corporate communications roles, he led a regional public relations effort across Southern California for CBRE, played a key marketing role on JLL’s national retail team, and was responsible for directing the global public relations effort at ValleyCrest, the nation’s largest commercial landscape services company. In addition to his vast commercial real estate experience, Dennis has worked on communications and launch strategies for a number of residential projects such as Disney’s Celebration in Florida, Ritter Ranch in Palmdale California (7,200 homes, 22,000 acres), WaterColor in Florida and PremierGarage in Phoenix. Dennis’s agency background included firms such as Idea Hall and Macy + Associates. He has earned an outstanding reputation with organization leaders as a trusted advisor, strategic program implementer, consensus builder and exceptional collaborator. Dennis has developed and managed national communications programs for Fortune 500 companies to start-ups, both public and private. He’s successfully worked with journalists across the globe representing clients involved in major-breaking news stories, product launches, media tours, and company news announcements. Dennis has been involved in a host of charitable and community organizations including the American Cancer Society, Easter Seals, BoyScouts, Chrysalis Foundation, Freedom For Life, HOLA, L.A.’s BEST, Reach Out and Read, Super Bowl Host Committee, and Thunderbirds Charities.

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