Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
This note answers some of the most frequently asked questions that we received from clients during a recent online briefing about the latest US tariffs on China. Watch the original briefing here . What has been announced? Yesterday was the end of a …
15th May 2024
After a prolonged period of weakness, the West Coast ports have seen an improvement in trade volumes recently. However, industrial demand in these markets remains very weak and growing headwinds – most notably the threat of greater tariffs on Chinese …
10th May 2024
With downtowns generally suffering most from the growth in remote work, the hardest-hit cities such as San Francisco are now seeing this impact other revenue streams too, not least tourism. While there are promising signs that conversions from office to …
2nd May 2024
The wide divergence in global office market performance to-date has been driven by significant differences in the return to office and the impact that has had on occupiers’ leasing decisions. US markets have been the major losers, while those in …
29th April 2024
While the headline of the Q1 NCREIF NPI data (-0.9% q/q total return) suggests we could be near the end of the price falls, we think this simply stored up bigger falls for the rest of the year. The growing share of underwater loans, as well as the far …
26th April 2024
While overall surveyor sentiment remains negative, the Q1 RICS survey appeared to show a divergence in views between respondents of where in the cycle the market currently is. We think the apparent differences in views stem from the growing discrepancy …
The latest e-commerce statistics suggest that the pandemic has left US online sales on a permanently higher trend. That will be bad news for retail rents generally, though the detailed data also hint that there may have been a return to physical shopping …
23rd April 2024
The latest consensus figures have moved closer to our own total returns forecasts for the next three years. But they continue to expect a lower path for Treasury yields implying a smaller cap rate rise than us, which we think underpins the divergence …
9th April 2024
Note: We’ll be covering our views on residential market winners and losers in both the for-sale and rental markets in a Drop-In Tuesday 16th April 1100 EST/1600 BST . Register here for the 20-minute session. Our latest office metro forecasts highlight …
8th April 2024
Note: We’ll be covering our views on residential market winners and losers in both the for-sale and rental markets in a Drop-In Tuesday 16th April 1100 EDT/1600 BST . Register here for the 20-minute session. We expect a surge in completions and a …
4th April 2024
Note: We’ll be covering our views on residential market winners and losers in both the for-sale and rental markets in a Drop-In Tuesday 16th April 1100 EST/1600 BST . Register here for the 20-minute session. As mortgage rates fall, we think the …
25th March 2024
Note: We will be discussing the outlook for residential markets across the US in a 20-minute online briefing on Tuesday April 16th. Find out more here . Overview – This year is being flagged by many as the year the recovery starts, but there is still a …
22nd March 2024
Our updated remote worker preference scores again highlight Nashville as the most attractive metro for remote workers, while San Jose is the least attractive. The winners continue to be predominantly in the South, reflecting relatively low living costs …
13th March 2024
Commercial real estate investment saw its worst year in over a decade last year. Most brokers seem to expect a recovery in investment activity this year as the Fed cuts interest rates and distressed assets come to market. However, we think the effect of …
5th March 2024
Relatively high interest rates and structural problems within offices will weigh on the commercial real estate recovery over the next three years. Indeed, we forecast the upturn will be weaker than in any previous cycle across global markets. And with …
4th March 2024
The resilience of the US economy in this cycle means the rise in distressed assets has been much slower than in the GFC-era recession, as relatively few firms have gone bust. But the structural adjustment in office demand will ultimately have a similar …
29th February 2024
All-property valuations saw the largest quarterly increase in over a decade in Q4, as property yields rose across all sectors and the 10-year Treasury yield saw its sharpest quarterly decline since Q1 2020. At the sector level, industrial still looks …
26th February 2024
All-property values are down by 15% since mid-2022. But, with cap rates set to climb toward 5.5% by the end of the forecast period, we think capital value falls have some way to go still, with the total decline set to reach 26%. For offices, the …
20th February 2024
Following the huge fall in multi-family starts in January, we suspect the apartment sector will continue to be a drag on new development this year. But construction of single-family dwellings will remain strong. In January, housing starts suffered their …
19th February 2024
While we expect the office and multifamily sectors to account for the lion’s share of distressed assets over the next couple of years, there is an important distinction between the two. Unlike multifamily, we expect impacts on offices to be widespread, …
15th February 2024
Strong January lending growth not a sign of recovery yet There was a surprisingly sharp increase in the amount of outstanding commercial real estate (CRE) debt held by commercial banks in January, which rose by $10.7bn, the largest monthly increase …
12th February 2024
Western metros again at risk from announced layoffs Although December’s average job growth rate of 0.3% 3m/3m across our 30 metros signalled a tepid end to 2023, it brings to a close a surprisingly solid year for total employment. The same can’t be said …
6th February 2024
Recent headlines have drawn attention to the immediate risks facing multifamily investors and lenders. While we think this concern is appropriate, we think the biggest risks face assets financed at historically low fixed rates in 2020-21. Problems are …
5th February 2024
We think the recent divergence between the BLS measure of apartment rents and other sources is due to reliability issues with the former, which we expect will be revised higher in future releases. Therefore, while it currently points to a downside risk to …
31st January 2024
Typically, US REIT price indices have been a good indicator of the growth path for capital values in the direct market. That said, even though REIT prices rebounded in Q4 2023, we don’t expect the direct market to follow any time soon as the property …
30th January 2024
The worsening in total returns to -3.0% q/q in Q4 was consistent with our expectations of bigger-than-average year-end markdowns. But the major takeaway was that the data and NCREIF’s release notes support our view that there will be growing distress and …
29th January 2024
The Q4 RICS survey suggested that occupier and investment sentiment remained pessimistic in Q4. We expect sentiment will be subdued in at least the first half of 2024, with credit conditions staying tight and growing signs of distress, particularly in the …
25th January 2024
We expect evidence of distress to ramp up this year as loan extensions end. Many borrowers will be forced to either inject new capital, return assets to lenders or sell into a soft market. Those assets returned to lenders will also ultimately end up on …
22nd January 2024
We are downbeat on industrial total returns over the next two years compared to the consensus because of our relatively pessimistic views on both rents and cap rates. And we think the risks to long-term returns are skewed towards the downside, which, if …
16th January 2024
Tepid lending in December closes a sluggish year for activity Net lending on commercial real estate (CRE) by banks was positive again in December, rising by $4.2bn in the month. (See Table 1.) That said, the monthly change was broadly in line with the …
Our total returns forecasts for 2024 are significantly below consensus, as we predict that value falls will reach double digits for the second consecutive year. Retail stands out as the only sector where we expect positive returns, but distress in the …
9th January 2024
Office-based jobs contractions focused in Midwest and West Coast Total employment growth in November across our 30 metros was weak compared with the rest of 2023, growing by 0.3% 3m/3m once seasonally-adjusted. On average, office-based jobs contracted for …
4th January 2024
While SVB’s collapse in March and sharper rises in interest rates led to larger-than-expected falls in commercial real estate (CRE) values, our expectations for sector and regional winners were broadly correct. A year ago, we outlined our key calls for …
3rd January 2024
We think more pain is in store for US commercial real estate as weak economic growth and high interest rates continue to take their toll. But which sectors and regions are most exposed, which will prove resilient, and when can investors expect recoveries …
2nd January 2024
We expect apartment markets to perform poorly over the next two years, with all our 17 metros seeing capital values lower at the end of 2025 than they are now. However, there will be substantial differentiation. At the top end, we think Houston apartment …
We expect the sharpest fall in apartment completions in 2025-26 in Boston, Denver, NYC and Seattle. Those cities will also be joined by Sunbelt markets where oversupply is already denting rents, including Austin and San Antonio. By contrast, there is …
28th December 2023
The performance of the 17 office markets we forecast will continue to be driven by structural factors over the next couple of years. That points to further weakness in the six major markets, where traffic and long commutes are a major drag on office …
20th December 2023
November’s slight resurgence in lending likely temporary Net lending on commercial real estate by banks resurged in November, despite signs from other data that lenders would continue to pull back from real estate lending. That said, the $4.4bn of net …
18th December 2023
Overview – Persistent weak growth and elevated (albeit soon-to-be falling) interest rates continue to spell trouble for real estate values. We see NOI growth softening further over the next year as the industrial rent boom gives way to more “normal” …
15th December 2023
Property yields rose across all sectors in Q3, but this was offset by a sharp rise in alternative asset yields towards the end of the quarter. As a result, all sectors saw a deterioration in valuations, which pushed the retail sector back into the …
6th December 2023
All-property values are down by 12.5% since mid-2022, but we expect an eventual decline of above 20%. Much of the correction at the all-property level is driven by our forecast for cap rates to go above 5% for all-property. For offices, additional drivers …
4th December 2023
In this Global Economics Update , we describe eight of the biggest risks to our economic forecasts for 2024. The unusual nature of this cycle and uncertainties surrounding the transmission of monetary policy mean that the biggest risks relate to central …
30th November 2023
Office-based jobs contracted for the first time in over three years Total employment grew by 0.3% 3m/3m once seasonally-adjusted in October across our 30 metros, which is weak both by this year’s standards and of the previous decade. Meanwhile, …
Even though we expect the Fed to go into cutting mode within the next six months and the 10-year Treasury yield to fall below 4% in 2024, we don’t expect this to provide any respite for real estate. Indeed, given we think the 10-year yield will range …
29th November 2023
Our recent r* work reinforces the view that property yields will stay relatively high longer term. That implies global returns in low single digits over the next decade or so, well below pre-pandemic averages. Our recent Global Economics Focus summarises …
27th November 2023
Since early 2020 there has been a clear divergence in performance between data centers and the traditional commercial real estate sectors. Looking forward, we expect the hyperscale sub-sector will continue to outperform off the back of growing cloud …
20th November 2023
During the past decade, the global economy has transitioned out of an era in which globalisation was the key driver of economic and financial relationships into one shaped by geopolitics. Previously, most governments had believed that closer economic …
16th November 2023
Our forecasts for commercial real estate values remain well below consensus, even after the latest downgrade. While our sector rankings are consistent with the consensus, we are predicting a more substantial rise in cap rates by end-2025, which will see …
15th November 2023
Second month of declining loan balances and plenty more to come The second consecutive monthly decline in outstanding commercial real estate loan balances held by US banks in October means the data are starting to reflect the pullback in real estate …
13th November 2023
With vacancy set to stay elevated, development finance remaining expensive, and values to continue falling next year, we expect construction starts will be weak in all sectors over the next 12 months. This will weigh on completions into the medium term, …
10th November 2023
