Industrial and office properties forecast to outperform

The United States’ commercial real estate market continues to improve in all areas, according a recent report published by Deutsche Asset & Wealth Management. With economic growth improving, real estate returns are set to outperform most other asset classes.

The strongest property sectors in the next five years are expected to be industrial and office as they are set to benefit from strong income growth. Though the retail sector will continue to have steady net operating income (NOI) growth, the gains will be lower than those of office and industrial. The apartment sector will be a solid performer, but is expected to weaken in the near term as more new supply comes online and slows rent growth.

The industrial market has seen consistent leasing demand since 2012 — indicating a growth cycle — and will build upon its strong performance in 2014. The office sector is in its strongest position since the recession, and conditions should continue