Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
Third quarter data showed growing evidence of a softening in tenant demand in many metros. In particular, demand appears to be slowing in a number of West Coast markets, as hybrid and remote work becomes embedded in work patterns and the cost of real …
29th November 2022
The sharp rise in Treasury yields this year has finally begun to feed through to the property data. Q3 investment activity fell by more than 20% on both a q/q and y/y basis, with loan originations also falling back notably. And valuers have begun to …
22nd November 2022
Our current view is that we see a mild recession in H1 2023, but if we were to see a more substantial drop in GDP, we think the extra downside impact would be felt most in the apartment sector. Indeed, if GDP were to fall by an additional 1% …
17th November 2022
Bounce-back in lending not expected to last CRE lending saw a surprise uptick in growth in October following a rebound in the multifamily sector, although net lending remains below the average for this year. Despite the bounce-back this month, we still …
14th November 2022
Widespread downgrades, but still well short of the negative returns we expect Consensus forecasts for 2023 have been downgraded pretty sharply since the Spring, but we don’t think they have gone far enough. While the consensus is predicting total returns …
10th November 2022
In line with changes in our global economic view, we have made significant downgrades to our commercial real estate forecasts for the next couple of years. As a result, we now expect a much bigger drop in property values next year that will cause annual …
8th November 2022
Lagging metros unlikely to reach pre-pandemic peaks anytime soon Employment continues to trend higher across the 30 metros, but nearly half remain short of pre-pandemic peaks, including all six major metros. Indeed, with job growth slowing, we don't …
2nd November 2022
The jump in multifamily housing starts in the first half of 2022 implies a surge in completions over the next couple of years to a multi-decade high. But while rental demand is now moderating, the continued lack of homes for sale means we doubt it will …
31st October 2022
Occupier and investor sentiment turned negative in Q3 The RICS Q3 survey indicated confidence has continued to fall from last quarter, as occupier sentiment turned negative for the first time in 2022. With a US recession looking likely early next year, …
27th October 2022
Returns falling sharply and set to turn negative in Q4 As expected, NCREIF all-property total returns dropped back significantly in Q3, to just 0.6% q/q, as investor demand pared back in response to higher alternative asset yields and the poor outlook …
26th October 2022
Revenues in the hotel sector have recovered to near pre-pandemic levels after being the hardest hit by COVID-19. Although there are few signs yet of momentum slowing, we expect growth in the sector to stall until the end of 2023 as economic weakness …
21st October 2022
With a US recession looming, Kiran Raichura and Andrew Burrell held a briefing on the impact of weaker growth on commercial real estate returns and answering your questions. The team explained how our macro view of the US economy and policy will drive the …
20th October 2022
Lending growth begins to slow as economic headwinds mount CRE lending growth slowed significantly in September, with both multifamily and other commercial sectors seeing the smallest rise in outstanding debt for at least six months. We expect the rate of …
17th October 2022
The weaker economic growth outlook will weigh most heavily on the retail and apartment sectors, where we have made the largest downgrades to our rental growth forecasts. But the relatively small size of those revisions mean the impacts of higher bond …
14th October 2022
With a mild recession now built into our forecast, the outlook for commercial real estate performance has worsened. But because this is a relatively small downgrade and it is joined by an expectation that the Fed cuts rates sooner than previously thought, …
12th October 2022
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
REIS data show rent-free periods dropped back in the first half of the year, hinting at a tightening market. But with occupiers still rationalising their office portfolios, we expect vacancy to tick higher over the next 18 months, which will continue to …
6th October 2022
We think the Charlotte office market will continue to outperform the US average, as firms capitalise on the city’s affordability and position as a prominent financial district. As such, even though completions will be strong this year and next, we …
5th October 2022
Losing metros showing little sign of reaching pre-pandemic peaks The greater number of metros seeing a decline in total jobs in August comes as little surprise given the slowdown in the national data this month. But for the major six metros and poorer …
28th September 2022
Overview – The overriding story this quarter is that although weak demand and steady inventory growth in the next couple of years will push up vacancy in many metros, we still see asking rents growing solidly as firms compete up rents on new, high …
23rd September 2022
We expect a sharp slowdown in apartment rental growth across the board, as job growth slows, affordability constraints bite and an influx of supply pushes up vacancy. But some markets will perform better than others. Rent prospects are strongest in the …
16th September 2022
A forward-looking fair value analysis of the 17 apartment metros that we forecast suggests that Phoenix and the Western markets look most overvalued. This insight underpins the changes to our yield forecasts in our forthcoming Apartment Metros Outlook . …
14th September 2022
Rapid growth in outstanding debt, but signs it should slow in September CRE lending saw an even stronger rise in August than in July, with multifamily and other commercial sectors both seeing a large increase in outstanding debt. But there are signs that …
12th September 2022
Overview – Higher interest rates mean that real estate looks significantly overpriced in all sectors. The latest activity and performance data suggest that a correction is underway, but as we now think the 10-Year Treasury yield has peaked, we expect the …
9th September 2022
1st September 2022
Office employment showing signs of shrinking in some key office markets Almost all metros saw further gains in total employment in July, with Dallas continuing to lead, and joined by Houston, Charlotte and Miami as the fastest growers. But office-based …
31st August 2022
Despite a stabilisation in property yields, valuation scores fell again in Q2 on the back of further rises in alternative asset yields. Apartment and industrial pricing look most stretched, but also offer the best rental upside for investors. That …
26th August 2022
Q2 data showed a mixed picture across the three sectors. For offices, the northern coastal markets continue to lag, with rent growth turning positive but still weaker than most other markets. Houston had an awful quarter for demand, and new supply …
24th August 2022
As the economy slowed in Q2 and interest rates rose, investors appear to have become less willing to compete property yields lower and investment volumes look close to turning. While occupier demand was steady in most sectors, there were signs of a …
22nd August 2022
Another bumper month, but we expect lending growth to slow CRE lending was again exceptionally strong in July, outpacing even the gains seen in recent months. But with investment transaction totals softening in Q2 and our expectation of a further slowdown …
15th August 2022
Commercial property wasn’t initially hit by the worsening in economic conditions at the turn of the year, but there are now growing signs of anxiety. Not only that, but even if the economic gloom is short lived and any downturn is mild, we expect …
12th August 2022
Pandemic-accelerated migration patterns were already driving outperformance in the southern states. But they have also brought the poor performance of weaker markets to the fore. With those structural changes likely to continue to play out over the next …
10th August 2022
We think that major distribution hubs, where rents are high and availability is low, will underperform their neighbouring markets over the next few years. Tenants will increasingly look past the major hubs in favour of nearby markets with better …
4th August 2022
No sign of any convergence in metro trends There was little evidence of any slowdown in June’s job figures, but the deep divisions in performance at the metro level remained. Dallas and Austin stood out on a range of comparisons, while Pittsburgh and L.A. …
3rd August 2022
Sharp reverse in real estate sentiment in Q2 The latest RICS survey for the US highlighted the steepest drop in confidence since early 2020, abruptly reversing the building optimism of recent quarters. This adds to the growing evidence that the peak of …
28th July 2022
Annual returns now past their peak and set to slow further in H2 NCREIF total returns fell back again in Q2, dropping to 3.2% q/q from their end-2021 peak of over 6%, as higher interest rates and weaker growth hit property performance. We expect the …
26th July 2022
The contrast between the strong performance of the apartment sector and the weak performance of offices in the last two years has made office-to-residential conversions more viable, but the numbers still don’t appear to stack up in most cities. In fact, …
22nd July 2022
Signs of slowing momentum in CRE lending growth CRE lending growth was again strong in June, but outside of the multifamily sector, there are signs the rate of growth may have peaked. And with investment transactions slowing, we expect a significant …
18th July 2022
The large-scale deterioration in office NOIs that we predicted would occur by the end of 2025 appears, on the face of it, to be some way off. But offices are the only sector seeing rising delinquency rates, and with office utilisation rates topping out …
15th July 2022
Overview – Since the release of our previous Apartment Metro Outlook three months ago the interest rate environment has become more negative for real estate, and we now expect yields to rise in many metros this year and to see further increases in 2023. …
12th July 2022
Although we expect a comparable rise in interest rates to that which preceded the Global Financial Crisis (GFC), we think the risk of a credit-driven bust in the commercial real estate market is low. That reflects the much more conservative lending …
11th July 2022
Overview – In light of the deterioration in the economic environment, our office metro forecasts have been downgraded across the board. Those downgrades are driven by a substantial shift in our yield view, which mean that capital values in all 17 metros …
1st July 2022
Recoveries slowing but Dallas still powering on Employment growth slowed last month, but remained above its historic averages. The big gainer in May was Dallas, which recorded the strongest 3m/3m growth in both total and office-based employment, closing …
29th June 2022
Indicators that include a recently released investor sentiment survey and a sharp fall in REIT prices since the start of the year support our updated view that capital values will go into reverse in H2. In total, our latest forecasts call for a 6%-8% …
24th June 2022
Overview – The dramatic shift in the interest rate environment over the first half of the year means that we have brought forward (and increased) our forecasts for yield rises. Property valuations now look as bad as they did in 2007, and with the 10-Year …
21st June 2022
A recent MSCI article speculated that real estate investment could buck the deglobalisation trend given distinct features of the asset class, though we are not convinced that will bring many benefits. We have been writing about the end of globalisation …
14th June 2022
Lending growth maintains momentum in May Commercial real estate debt continued to grow at a decent pace in May, in line with the recent strength in investment activity. However, we expect a weaker economic backdrop to weigh on commercial property lending …
13th June 2022
The perception of Amazon as a bellwether for the industrial sector made the announcement that it had over-expanded in the last two years a potentially worrying one. But, the fact that Amazon is only cutting back on a small proportion of its space, and …
8th June 2022
Winning and losing metros increasingly reflect structural pandemic impact The ongoing jobs recovery continued in April, although employment remained below its pre-pandemic level in more than half the 30 metros covered. Those losers tend to be expensive …
1st June 2022
There was a huge deterioration in property valuations in Q1, reflecting the sharp rises in alternative asset yields recorded since the start of the year. The size of those yield rises mostly dwarfed the differences in property yield changes across sectors …
31st May 2022
