Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
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
Overview – We have made substantial downgrades to our metro-level forecasts this quarter. The outlook for office-based employment growth has been hit by tech sector struggles, weighing on demand in many western markets. We have also pushed through bigger …
14th April 2023
We expect a surge in completions and a slowdown in employment growth to push vacancy substantially higher in all markets over the next few years. That will slam the brakes on rental growth, causing an outright fall in several of the major markets as well …
12th April 2023
Overview – We have made substantial downgrades to our forecasts this quarter. Aside from their direct impact through tighter lending conditions, last month’s regional bank failures appear to be helping crystallise some of the risks to commercial real …
6th April 2023
Note: Office-based employment data for several metros were missing for February. February employment growth slowed after January’s high February saw a slowdown in jobs growth after a strong month prior, suggesting January’s jump in employment was an …
5th April 2023
While we expect a more-than 20% peak-to-trough price correction for US commercial real estate, offices face a much tougher outlook, with large falls in net operating incomes compounding the broader re-pricing facing the sector and driving a …
4th April 2023
US regional banks’ higher exposure to CRE debt means we expect their struggles to weigh heavily on credit availability for commercial real estate investors. Even without building in second round effects on lending from other debt providers we expect this …
23rd March 2023
While real estate is not the main cause of the current financial turbulence, as it was in the late 2000s, it has played an indirect role and may be implicated in any further instability. And property will also be vulnerable to the effects of recent …
21st March 2023
While the Credit Suisse rescue might draw a line under that particular institution’s problems, it is clear that confidence in the financial sector overall is still extremely fragile. So regardless of whether more financial institutions run into trouble, …
20th March 2023
Strong payrolls did not make it into the office January was an especially strong month for payrolls data, and this translated into positive employment growth across all 30 of the biggest metros. However, this was not the case for office-based jobs, as a …
17th March 2023
The direct impact on real estate of the collapse of two US regional banks over the weekend is likely to be relatively small. But we expect lending criteria to become more cautious in the short-term, which will weigh on the supply of real estate debt. …
16th March 2023
We have already outlined some different scenarios of how things might evolve from here and it is still possible that the situation calms down quickly. But in this Update , we think through how the more adverse of our scenarios might evolve. There are …
Slight uptick in February’s lending, but still below 2022 average Net commercial real estate lending ticked up in February following a slowdown the month prior. That said, monthly lending activity across all sectors remained below the average for 2022. …
13th March 2023
This dashboard shows our latest national sector-level commercial real estate forecasts for the next five years, as well as summary forecasts for a handful of core macroeconomic variables. If you have subscriber access to the data underlying this …
Failed dockworker union negotiations on the West Coast have led to further diversion of US imports toward the East and Gulf Coasts, supporting warehousing demand in those markets for longer than expected. We expect a degree of this demand to persist into …
10th March 2023
We expect industrial completions to exceed 3.5% of inventory this year, despite the first quarterly drop in space under construction in Q4 for over two years. But new starts are already slowing and with higher interest rates, elevated construction costs …
9th March 2023
Our new forecasts for metro employment growth have prompted limited change in the rankings for total jobs over the next three years. But, there are two shifts, both owing much to recent and likely further cuts in the tech sector. First, we think 2023 …
3rd March 2023
The current economic downturn will mean that short-to-medium term property performance is under-par. But over a longer horizon, we expect real estate returns to reassert their traditional position somewhere between bonds and equities. Last year was an …
2nd March 2023
Q4 property valuation scores rose from their Q3 troughs, as equity earnings yields fell and property yields all increased. Even so, that left all major sectors still looking overvalued, suggesting yields have further to rise before property looks fairly …
23rd February 2023
Data for the fourth quarter showed a widespread deterioration in occupier demand in all three sectors. This was worst in some of the big six and West coast metros, with markets like Phoenix, Portland and San Jose joining San Francisco and Chicago in …
22nd February 2023
While the recent economic data have surprised on the upside, property market indicators were broadly worse than expected in Q4. Occupier demand softened, particularly in the office and apartment sectors, as concerns about the outlook weighed on firms …
17th February 2023
Slowdown in lending activity beginning to show in January The expected slowdown in net lending to real estate began to show in January. This was seen across all sectors and the latest Senior Loan Officer (SLO) survey suggested this will continue, as banks …
13th February 2023
Almost three years on from the pandemic, only middle-income households are yet to recover financially. In the face of a looming downturn, we expect this will drive growth for discounters as middle-income households trade down their spending habits, …
10th February 2023
We expect stretched affordability and rising unemployment to lead to an increase in rental arrears and evictions in the coming quarters, causing rental household formation to turn negative and apartment demand to soften. We have argued since mid-2022 that …
9th February 2023
We expect a further slowing in office completions over the next few years as a combination of factors weigh on the profitability of new projects. But our latest review of the metro-level completion forecasts saw large upward revisions for Austin, NYC and …
3rd February 2023
Office-based employment prospects have taken a dive Despite the solid payrolls data for December, there was a clear softening in employment growth in several large metros. But those that have performed the best since the pandemic continue to outperform, …
1st February 2023
Market sentiment declined further in Q4 as the outlook deteriorated The latest RICS Survey conveyed a further decline in confidence following a turning point in the previous quarter. Comments from surveyors point to high interest rates as the main …
26th January 2023
Sharper markdowns mean worst quarter for total returns since Q2 2009 The 4.45% hit to all-property capital values in Q4 was more substantial than our end-2022 forecasts implied, although recent news of bigger valuation markdowns in December made this less …
25th January 2023
We expect the slowdown in investment activity in the second half of 2022 to persist into the first half of 2023. But we think transactions will begin to recover later this year once interest rates have topped out and much of the valuation adjustment has …
20th January 2023
Lending activity still strong in December On the surface, net lending to real estate in December looks to have reached its highest since October 2008. However, this apparent spike in lending was almost entirely due to the addition of a recently-converted …
16th January 2023
Our updated remote worker metro ranking shows some important changes since the end of the pandemic, though the winners remain in the South. Nashville tops the table, having climbed seven places. Tucson and Memphis also climb into the top 10, with …
11th January 2023
A large part of the real estate sector’s carbon footprint is related to electricity production and so will shrink over time as the use of renewables continues to expand. The biggest challenges to reducing property sector emissions will be in emerging …
9th January 2023
Our key calls for 2023 highlight major shifts in the outlook for real estate. We expect all-property total returns to be negative for the first time since 2009. At a sector level, we expect retail to do best, ending industrial’s decade of dominance, while …
6th January 2023
While our forecast that the economy would slow in 2022 on the back of high inflation and Fed policy tightening was right, like every other forecaster we were surprised by its extent. This threw off our call for further property yield falls in 2022. But we …
4th January 2023
Click here to read the full report. We now expect a small fall in rents next year in a handful of metros as affordability constraints and falling employment take their toll on demand. At the same time, a wave of completions in some of the markets with the …
29th December 2022
Click here for full report: Overview – Consistent with our national office story, we expect a few years of insipid rent growth and returns for most US office markets. Expensive coastal metros will continue to see weak demand as high rates of sublease …
23rd December 2022
Click here to read the full report Overview – The sharp rise in interest rates this year has prompted a price correction, which is now coming through in valuation-based indices. Combined with the mild recession we are forecasting for 2023, this will weigh …
19th December 2022
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Property markets rebounded strongly after 2020, in part boosted by favourable structural shifts brought on by the pandemic. But …
15th December 2022
On the face of it, the news of unlisted REITs reaching redemptions limits suggests cause for concern as it could point to forced sales over the coming months. However, both BREIT and SREIT have solid cash balances that can last through at least three more …
13th December 2022
Lending showed little sign of slowing in November CRE lending grew solidly again in November, at a rate close to the six-month average, with other commercial sectors picking up the slack from slower growth in multifamily lending. Although lending growth …
12th December 2022
The single-family rental market has been on a roll since the GFC and the pandemic provided a further boost. Nonetheless, while it may hold up slightly better than multifamily over the next year or so, affordability pressures mean that current rental …
8th December 2022
Property valuation scores fell further in Q3 as rises in alternative asset yields outweighed the marginal increase in all-property yields, but alternative asset yields have dropped back in Q4 to-date, meaning we may have reached a trough. (See Chart 1.) …
6th December 2022
Total employment grew across the 30 metros, but at a slower pace as labour market conditions continued to ease. With our proprietary indicators pointing to a 90% probability of an imminent recession, we maintain the view that those metros worst affected …
1st December 2022
