US gross domestic product rose 0.7 percent in the first quarter, the most sluggish rate since the first quarter of 2014. Reasons for the slow growth included stagnant consumer spending, lower levels of investment by businesses and reductions in federal defense spending.
The public non-listed REIT sector is in a state of flux as it makes changes to compete with institutional investors such as Blackstone Real Estate Income Trust and Rodin Global Property Trust, which are trying to make inroads in this market with lower fee structures. In response, public non-listed REITs are lowering their own fees, with some dropping below 10%, according to Summit Investment Research.
It may be that the high-yield bond market's seven-year streak is coming to an end, with these funds experiencing $10.5 billion of outflows last month -- the highest level since December 2015, according to EPFR Global. "Valuations in high yield are at or approaching their post-crisis highs," according to a Bank of America note published this week.
The US office vacancy rate in the first quarter made its first quarterly increase since 2010, ticking up by 0.1%, according to CoStar's State of the US Office Market Q1 2017 Review and Forecast. The office market and economy remain very good by historical standards, according to Walter Page, CoStar Portfolio Strategy director of office research, who says, "We're at the highest levels of occupied space, the highest rental rate levels ever... At this point, the risk of recession in the near term appears to be very minimal."
The retail environment is intimidating, with some 9,000 stores slated to be closed this year, says Store Capital CEO Chris Volk. Store Capital, whose focus is profit-centered properties, is now 85% invested in the service and manufacturing sectors with a 15% exposure in retail, but few of its stores are affected by the woes afflicting some retail chains, he says.
Technology is providing valuable support in accounting as the workload continues to grow, said Mark Patterson, vice president of tax at Duke Realty Corp. But technology can only go so far to aid compliance with REIT tax rules, and Patterson emphasized the importance of the REIT tax director staying in touch with the chief financial officer and chief accounting officer.
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The low inflation that has characterized a sluggish global economy appeared to be lifting over the winter months. But that now appears to have been a temporary effect of higher oil prices, and the forecast now is that the gloom will persist.
The House of Representatives will not be voting on a health care reform bill this week, having failed to secure the necessary votes for passage. Separately, both chambers of Congress plan to approve a one-week extension to pass a funding package for the government for the remainder of the fiscal year, which ends Sept. 30.