The U.S. commercial real estate market is expected to see an average total return of 6.5% on the National Council of Real Estate Investment Fiduciaries Property Index across all property types in 2019, according to the Pension Real Estate Association's third quarter consensus forecast survey.
The survey, conducted in August, was based on the responses of 26 firms representing U.S. property investment managers, advisers and researchers.
In 2019, survey respondents predict that the industrial sector will have the highest average total return, hitting 11.7% on the NCREIF Property Index. The office and apartment sectors are expected to yield total returns of 6.3% and 6.0%, respectively. The retail sector is predicted to reach a total return of 2.8%.
On average, the respondents also forecast an income return of 4.5% and an appreciation return of 2.0% across all sectors in 2019, with only the retail segment expected to deliver a negative appreciation return for the year at -1.9%.
The survey participants expect total returns to drop to 5.3% in 2020 and to 4.5% in 2021. The industrial sector is predicted to decrease to 8.2% and 6.1% over the same two years, respectively, while the apartment segment is expected to fall to 5.4% and 4.6%. The office and retail sectors are expected to drop to 5.0% and 3.3%, respectively, in 2020, and to 4.0% and 3.6%, respectively, in 2021.
