Will Fourth Quarter Volatility Hamper 2019 Activity?

The year ended with stock market volatility and a government shutdown, two events that left many wondering what to expect for 2019. Overall, 2018 was a strong growth year, especially for commercial real estate, an industry that was the beneficiary of material rent growth and price appreciation. While the year ended on a somewhat chaotic note, the underlying economic fundamentals that drove growth throughout the year are still in place to drive continued growth in 2019.

“2019 will be interesting. Through the fourth quarter, we have had material volatility—as much volatility as we have had since 2015 and 2016, when the market pulled back,” Bill Fishel, the senior managing director and co-head of the Los Angeles office at HFF, tells GlobeSt.com. “Internally, the topic of conversation has been focused on the divergence between public markets and quarterly financials or private company financials. The feedback that we are getting from ground is that this was a very profitable quarter. When you look at fundamentals like job growth, population growth and the unemployment rate, it feels like there is going to be the potential for us to rebound and grow out of this recent volatility.”

Along with sustained economic growth, the concerns around global trade and geopolitics and public sentiment related to the length of the recovery, which is on track to be the longest in US economic history, will also graduate to 2019. Fishel, who notes that he is absent a crystal ball, says that the good outweighs the bad. “If you take all of those things and put them into a blender, you can look at what is being priced into the market and what is available and make really educated and informed bets based on really good information and underwritable trends,” he says.