A brief look back at President Trump’s first year in office shows mixed signals, especially here in the local Sierra Foothills region of California.
Nationally, consumer confidence rose to a 17-year high, and the stock market, as represented by the Dow, set 70 record closes ending the year up 25%.
Locally, regarding commercial real estate (CRE), median sale prices and rents increased, but net lease absorption and sales volume decreased. The drop in year-over- year CRE “activity” in 2017 may be the result of several factors including: investor dollars being directed into the booming securities bull market; a volatile political environment and a new unconventional administration causing many to take a “wait and see” approach; proposed tax reform and its unknown effect on CRE; and skyrocketing construction costs and entitlement risk requiring more conservative underwriting standards.
The final quarter of 2017 relative to sales volume and transaction activity did pick up substantially over the previous three quarters. I suspect this may be representative of near term trends and, if so, the CRE market in 2018 in Nevada, Placer and Yuba counties may be in for a banner year.