Tech, Hospitality and Other Industries Had Promising First Quarters This Year
Starting a business or investing? Know these four industries already doing well in 2018.
PHOTO CREDIT: Getty Images
The first quarter of 2018 is complete, prompting analysis of growing markets that can benefit entrepreneurs and startup owners.
Markets with notable growth and challenges include the real estate, tech, hospitality/lodging and industrial and logistics markets.
The Industrial and Logistics Market
The U.S. industrial market experienced demand outpacing new supply in the first quarter, following a brief time of supply and demand parity.
Forty-one million sq. ft. were absorbed compared to 35 million sq. ft. delivered, down 44.9 percent over the previous quarter. Near-term delivery figures anticipate to be, or slightly larger than, recent quarters, with the under-construction pipeline of 244.5 million square feet up 3.7 percent since the previous quarter.
The result of demand exceeding new supply is the increase of asking rents, by 1.9 percent to $7.01 per sq. ft., marking the highest level since 1989. The rents' increase of 5.9 percent year-over-year is notably higher than the average 12-month growth of 3.8 percent.
The growth of consumer consumption, business inventory and industrial production in the U.S. throughout Q1 should be notable to entrepreneurs. With consumer confidence hitting its highest level since 2004 and consumption rates hitting its highest level since the recession in 2008, entrepreneurs can view the industrial market with optimism, especially since consumer consumption correlates strongly with warehouse and logistics real estate demand.
The Tech Industry
Tech hosts several industries within it, including cybersecurity, enterprise software and health tech. They all provide insight regarding their first quarter performances for entrepreneurs.
Cybersecurity saw strong growth in the first quarter, aligning with the general strength of the underlying equities market. Data security has been at the forefront of headlines the past several quarters, as giants like Facebook and Equifax combine with the arrival of GDPR to place data security at the forefront of public attention.
One result is that Results International's Global Cybersecurity Index is up 18.5 percent over the last 12 months. Entrepreneurs can seize on cybersecurity stocks, especially those with interest in combating phishing, for potentially lucrative results.
The enterprise software sector is also flourishing, with 424 deals announced in the first quarter. Notables include Salesforce's $5.9B acquisition of MuleSoft, which renders Salesforce a go-to for cloud enterprising.
Enterprise software aggregators are in a promising niche, though entrepreneurs should be aware of challenges in further integrating CRM, ERP and infrastructure, especially with Salesforce strengthening their grip.
The HealthTech market is also one of note for entrepreneurs, with the market achieving a 21.2 percent quarterly increase. The uncertainty in the U.S. regarding health care coverage can complicate matters, though the HealthTech market continues to achieve success in the midst of this uncertainty.
The Hospitality and Lodging Industry
Demand continues to outpace supply in the first quarter, resulting in a strong U.S. demand for leisure and business.
Travel accommodations prompt the lodging market to show promise as a result, especially with demand for transient accommodations rising with demand caused by natural disasters in areas like South Florida, Houston and the Caribbean.
Specifically, the U.S. hotel industry reports record-breaking performances for the first quarter, driven by demand for accommodations as well as a U.S. president sympathetic to the lodging industry, being involved in the lodging industry himself.
However, uncertainty exists both domestically and internationally, especially regarding escalation in curbing immigration and travel access.
Entrepreneurs should be mindful of travel-related laws that can impact the hospitality and lodging industry.
The Real Estate Industry
The real estate market had an excellent year in 2017. Comparative to last year, the market in the first quarter of 2018 experienced relatively lower sales in comparison.
This tends to be the trend in real estate, with a small decrease in unit sales or dollar volume typical for quarter one. However, some real estate segments like REITs also see small improvements in Q1, too.
As a result, entrepreneurs should not over-react to a slow start. They should also acknowledge that the real estate market is less prone to marketing error disruptions, like when big brands falter on progressivism in marketing. Real estate is more to-the-point and driven by price, without the need for stock-altering marketing attempts.
These industries provide valuable insight into the U.S. economy as a whole while providing entrepreneurs knowledge on areas to focus on and expand resources.