Hot spots: property fundamentals in 2020

While property-wide returns will continue to cool in 2020, with appreciation generally staying flat, investors can still find hot spots where they can outperform the national average. The nationwide vacancy for multifamily is expected to edge up 20 basis points in 2020 to 4.5 percent, for example, as completions continue to match peak levels and supply outpaces demand. But seven smaller metropolitan areas — Albuquerque; Birmingham, Ala.; Colorado Springs; Dayton, Ohio; Greensboro, N.C.; Memphis; and Tucson, Ariz. — saw multifamily rent growth at 4 percent or higher as of third quarter 2019, according to CBRE’s 2020 real estate forecast.

Industrial properties are expected to encounter an overhang of space for the first time since 2008, with supply exceeding demand by 20 million to 30 million square feet. But rent growth will stay strong, climbing 5 percent according to CBRE, with growth especially concentrated in last-mile warehouses positioned to handle the increased de