I’m still bullish about owning US commercial real estate.  Yes, prices are high and yields are low.  Yet demand for quality CRE investments seem to continue unabated.    In late March, the Wall Street Journal reported that a Green Street Index of higher quality properties was up 24% above its previous peak in 2007 and 102% higher than the nadir in 2009.  The reason is that alternative investments such as stocks, bonds and MLPs continue to be unattractive to many investors.

My U.S. CRE investment thesis is that values will continue to climb as long as a) we have positive job growth in America, and b) there are no other investments that are more attractive.

Here are my investment themes for 2016:

• Europe, China and Japan have distorted their financial markets beyond recognition.
• Emerging market countries are experiencing inflation and economic slowdowns at the same time.
• U.S. inflation rates are likely to remain low until a year after oil prices stop their decline.
• A couple of meaningless rate hikes by the Federal Reserve
• The 10-year Treasury rate will be largely unaffected by Fed policy.
• The American economy rambles along with a tepid 2 percent growth rate.
• Residential mortgage rates are unlikely to increase above four percent.
• Low inventories will lead to continued price appreciation in most US housing markets.
• Foreign pension funds will continue to have a strong appetite for U.S. property.
• Japanese REITS and some Chinese entities will be eager buyers as well.
• Weak currencies will reduce CRE demand from investors from Mexico, Russia and Canada.
• Anti-corruption policies in China could reduce Chinese demand this year.
• Pension funds increase CRE allocations as they reduce commodity and hedge fund commitments

The growth trend in American commercial real estate prices is likely to continue until there is another investment alternative that is more attractive.  Maybe someday BRIC countries will look good again.  Maybe someday interest rates won’t be negative in Japan and Europe.  Maybe someday emerging markets will recover when commodity prices go up.  Maybe someday MLPs won’t have to cut their payouts.   I don’t see any of this happening in 2016.