Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
Overview – The outlook for offices is negative across all markets, but we expect substantial differences across the 17 metros we forecast. We now think Seattle, San Francisco and Austin will see vacancy rise by more than 5%-pts over 2023-25, taking the …
11th October 2023
The sell-off in bond markets has taken a breather today, helped in part by softer data on the US labour market. However, the scale of the moves over the past week has invoked comparisons to previous financial crises that have been caused by sharp moves in …
4th October 2023
IWG’s record revenues in the first half of this year may suggest that flexible offices are the answer for many firms as hybrid working cements itself as the ‘new normal’. However, we don’t think current flexible offices currently offer the right product …
Office-based jobs are on course to underperform total jobs this year for the first time since 2009 and there is a growing risk this could be repeated in 2024, though that is not yet our central forecast. At the metro level, we expect differentials to …
3rd October 2023
New York and LA see a decline in office jobs Total employment growth slowed slightly in August to 0.4% 3m/3m across the 30 metros we cover, once seasonally-adjusted. But office jobs in western cities have continued to decline as layoffs in the technology …
27th September 2023
Overview – With the economy showing signs of slowing and transaction volumes likely to stay low in H2 2023, a tough 6-12 months lies in store for commercial real estate. We still expect cap rates to rise on the back of higher Treasury yields, but the full …
25th September 2023
The bad news around US commercial real estate continues to roll in, but appraisal-based indices have so far only fallen by 10%. How much further do they have to fall, which sectors and regions are most vulnerable, and where is outperformance most likely? …
21st September 2023
Sharp rise in lending in August likely to be temporary The $29.0bn monthly rise in real estate debt held by US banks in August, now at $5.48trn outstanding, was the largest m/m increase in six months. However, we expect this spike to be short-lived, as …
18th September 2023
The recent outperformance of single-family REITs versus apartment REITs appears to be down to differences in the capital value outlook for the sectors, rather than any major difference in rental growth prospects. With our forecasts for single-family and …
15th September 2023
Data on cell phone usage suggest that cities with a high share of professional, scientific and technical occupations and long commute times are typically associated with poorer downtown recoveries. That is in line with our existing views, but also implies …
12th September 2023
Denver’s poor jobs market performance over the last year appears to have been driven by a combination of a downsizing in Central Bank staff and layoffs in its large telecoms sector. But the former’s weakness is likely to be short-lived and the latter has …
5th September 2023
Seattle sees record decline in information jobs in July Employment growth in July was near the average seen in 2023 thus far, at a seasonally-adjusted 0.5% 3m/3m across the 30 metros we cover. But the disappointing performance of information jobs …
30th August 2023
Property yields rose across all sectors in Q2. However, for the retail sector this was offset by rises in the 10-year treasury yield. Consequently retail saw a small decline in valuations, whereas valuations in the other sectors improved. That said, both …
25th August 2023
All-property values are down by 10% from their mid-2022 peaks, but we think there is still another 15% to come by the end of 2024. Much of that price fall will be driven by a rise in cap rates in response to higher interest rates. But, due to the …
23rd August 2023
We continue to expect historic highs for apartment completions in 2023-24 even though there are signs some will be deferred. This also means that, although new permits have dropped back amid softer market conditions and a tougher outlook for investors, we …
18th August 2023
On the back of the remote work revolution, US downtowns have seen reduced office-led footfall and rising crime rates. Cities will need to be proactive to drive conversion to alternative use and to find ways to regenerate what were often thriving areas …
15th August 2023
Total rise in July hides slowdown in commercial lending July saw the amount of outstanding debt secured against real estate rise (albeit marginally) after a sharp drop in June, driven by a strong rebound in residential lending. Across the commercial real …
14th August 2023
The data show a small, but limited, divergence in performance between overall class A and classes B and C office space. But that differential appears to have been driven by newly-built trophy space rather than the broader class A grouping. We expect this …
9th August 2023
Despite capital value falls of 7% and 9% to-date for industrial and apartments respectively, we are forecasting around 15% further value declines as cap rates rise. But the falls in appraisal-based indices appear to be lagging those in the market, where …
3rd August 2023
Office-based jobs suffering in western tech-led markets Seasonally-adjusted total employment growth rose by 0.6% 3m/3m on average across the 30 metros we track for the third consecutive month. But there has been clear weakness in the information sector in …
2nd August 2023
The latest RICS survey signalled a slight improvement in occupier and investment sentiment in Q2, but confidence remained low by historic standards. Tight credit conditions and a poor economic backdrop in the second half of this year suggest sentiment …
27th July 2023
Total returns were negative again in Q2 at -2.0% q/q. This was dragged down by the office sector, where values fell by 7% and quarterly returns were -5.8%, with all other sectors outperforming the all-property number. Nevertheless, we still think office …
26th July 2023
We have made only minor changes to our latest global forecasts which still imply that property will underperform other assets in the short to medium term. Further out real estate returns are set to recover, but, with yield spreads more compressed than in …
19th July 2023
Here are answers to some of the key questions that kept coming up during meetings with clients last week in New York and Chicago, and around my presentation to the NCREIF summer conference in Chicago . How bad will it get for offices? Our forecast for …
18th July 2023
The following is a presentation that Kiran Raichura gave to the NCREIF Summer Conference in Chicago on 12th July, 2023. … What does the new normal mean for real …
17th July 2023
Sharp drop in residential turned total lending negative in June Net lending to commercial real estate (CRE) in June was negative for the first time in over two years, but this was driven by a large drop in residential lending as elevated mortgage rates …
The latest economic and property market data support the view we’ve held since last year that there would be a growing differentiation between southern and western markets. We expect that to persist for the next few years thanks to the relatively high …
11th July 2023
Overview – Further downgrades to our national office outlook have driven corresponding cuts to return prospects in our metro-level forecasts this quarter. San Francisco still has the poorest outlook, with our projections for demand implying vacancy rises …
7th July 2023
We recently held a Drop-in titled “Industry’s decarbonisation challenge – From aviation to property”, which you can view on-demand here . This Update addresses some of the questions we received during the event, including those that we did not have time …
3rd July 2023
Overview – The effects of March’s regional bank failures have yet to come through in the performance data, but transaction volumes have fallen off a cliff. Signs of distress in offices are growing as the sector faces its own credit crunch, with very few …
29th June 2023
NYC employment finally returns to its pre-pandemic peak Total employment growth was resilient across metros in May, recording 0.6% 3m/3m on average. That growth was led again by Boston, Las Vegas and Charlotte, with San Antonio also seeing a rise of over …
28th June 2023
The reduction in office demand due to remote work will cause a hit to NOIs on a par with, or worse than, that experienced by malls over the last six years. And in line with the experience of malls, the structural nature of this hit to demand means the 35% …
22nd June 2023
The latest MSCI data indicate that values in western European office markets have held up better since the start of the pandemic when compared with the US and UK. But given these cities face similar long-term problems, we remain downbeat about the …
16th June 2023
Florida and other parts of the Sunbelt (notably major cities in Texas) will likely face the most severe physical climate risk over the next 30 years. While this is unlikely to come as a major surprise, we don’t believe that this risk is being consistently …
14th June 2023
Surprise increase in lending in May, but signs of distress growing While bank net lending to commercial real estate (CRE) turned positive again in May, growing signs of distress for existing loans point to further weakness ahead. (See Chart 1.) The …
12th June 2023
Our updated industrial metros analysis, which now incorporates the current vacancy rate, continues to point to Memphis as having the strongest prospects for rent growth over a three-year horizon. Miami, Orlando, San Diego, LA and Nashville also rank …
8th June 2023
Recent economic difficulties have forced online retail to tighten their returns policies. At face value, this seems good news for retail property as it may shift demand back to stores for certain categories. However the change is unlikely to be a big …
It comes as no surprise to see a sharp downgrade to consensus forecasts given the combined impact of the regional banking crisis and growing office sector distress. But despite those downgrades, our own forecasts are considerably more downbeat, …
2nd June 2023
Job growth holding up across metros; southern markets continue to lead Total employment growth reached a solid 0.7% 3m/3m on average in April for the second consecutive month, led by Boston, Las Vegas, Charlotte and Orlando. But for office-based jobs, …
31st May 2023
Our commercial property valuation scores rose sharply in Q1, suggesting that Q3 2022 was a trough in valuations. Office and retail sectors now look fairly valued. While we think retail values do not have much further to fall, concerns about the outlook …
26th May 2023
Metro level data for Q1 2023 showed the slowdown in occupier demand was widespread, with no market consistently outperforming across the sectors in terms of absorption. While office and industrial asking rents continued to grow, they did so at a slower …
24th May 2023
The economy has been relatively resilient so far, but with the banking turmoil set to weigh on activity, we continue to expect a recession this year. Slower growth has already translated to softer occupier demand across all property sectors. This will …
19th May 2023
Lending against commercial turned increasingly negative in April Net commercial real estate (CRE) lending slowed sharply once again in April. Lending against all commercial sectors turned negative for the first time in nearly six years, and with little in …
15th May 2023
The sharp rise in US manufacturing construction over the past two years is likely to continue into the medium term as firms take advantage of favourable government incentives. But as these expire, demand for the sector will wane as firms look overseas for …
12th May 2023
We think migration patterns of footloose workers will continue to play the largest role in driving the rental outlook across metros. But rent as a share of income will also have a bearing, weighing on prospects in major markets such as NYC, LA and Boston, …
9th May 2023
Metro employment growth remained resilient in March The rate of job growth in March remained virtually unchanged from the previous month, signalling resilience across our covered metros despite a slowdown in non-farm payrolls. Within the tech sector the …
3rd May 2023
Sentiment fell further in Q1 The RICS Q1 survey indicated confidence fell further in the opening months of the year but remains substantially above the lows seen during the height of the pandemic. However, we expect sentiment to drop further in the coming …
27th April 2023
Markdowns smaller in Q1, but this feels like the eye of the storm Total returns of -1.8% q/q in Q1 reflected a much smaller markdown in values than in Q4. But, looking ahead, we remain convinced that the strains being felt by many investors will drive …
26th April 2023
The physical risks facing commercial property are substantial with extreme weather events like floods and wildfires set to increase in both the US and Europe over the coming decades. Property markets have yet to fully price these in, especially in areas …
21st April 2023
March’s net commercial real estate (CRE) lending slowed sharply following SVB’s collapse early in the month. Lending against multifamily fell for the first time in 18 months, driven by a reduction in small banks’ exposure. Along with a softening in …
17th April 2023
