Kermit Baker, Chief Economist with AIA (American Institute of Architecture), dis, discusses the state of the current economic cycle on The Commercial Real Estate Show. Some highlights include:
- Getting long into period of growth
- Expect a bit of deceleration of growth
- Expects tax reform to take place under Trump
- Believes Trump effect will be positive for construction, etc., but questions remain
- Believes we are near the end of the cycle on multifamily construction
- Headwinds for commercial construction include higher interest rates, end of appreciation driven by low cost of capital
- Think we can have 2 to 3, maybe even 4, interest rate hikes in 2017
- Closing tip: Look very closely at labor, inflation, and interest rates, all doing OK now, but all at risk of getting a bit out of line.