This is good news for the real estate industry. While real estate cycles have yet to be repealed, market swings are likely to be less volatile in the future. Firms like CostCo, soon moving into Cincinnati, could spell real problems for less efficient and smaller competitors. In the midst of the holiday shopping season, regional malls are doing well enough, with sales running near last year's numbers. This good fortune may bring an increase in rents.
Shopping centers anchored by a grocery store also appear to be stable.
Overall, the retail sector will do fine in 1999. Apartments Multifamily housing starts are running ahead of possible growth in renter-oriented households. If interest rates stay low and housing affordability stays high, rental market demand will be modest in the higher income market, where vacancy rates are likely to increase in 1999. In some cases, rental rates for lease rollovers are netting double-digit increases. Large contiguous space is impossible to find, so new construction is bound to occur in the CBD market.