Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
Recovery in sentiment broadens out in Q1, but unlikely to last The RICS Q1 survey showed a further improvement in sentiment, driven by more confidence in prospects for the office and retail sectors. However, since the survey was conducted, the outlook for …
28th April 2022
Still a long way back to previous peaks for some of the worst-hit metros The recovery in employment broadly continued in March. However, the laggards in the recovery still look many months away from previous peaks in terms of both total and office-based …
27th April 2022
Strong start to 2022, but higher rates will slow returns later in the year Total returns on the NCREIF index were strong again in Q1, at 5.3% q/q. That was led by industrial, where they reached 11% q/q, with apartments at just over 5% and the other …
26th April 2022
The squeeze on consumer incomes points to a tough couple of years ahead for regional and super-regional malls, which tend to be more reliant on discretionary spending than other retail property types. But we expect the divergence in mall performance …
22nd April 2022
We think the recent upturn in office market performance is largely down to the one-off release of pent-up demand and remain downbeat about future prospects. With occupancy still languishing and remote working firmly established, we think that the risks to …
21st April 2022
Structural changes to working patterns and the resultant shifts in office demand will vary by industry and job type. Occupations like life and physical sciences are likely to see a low adoption of remote work, whereas IT sector jobs and those in financial …
13th April 2022
Overview – Following a surge last year, rental growth at the national level is set to slow over the next couple of years as demand falls back and affordability constraints bite. (See Focus. ) Alongside a gradual rise in yields, that will bring total …
7th April 2022
Southern metros set to remain the big winners at the expense of the north The jobs recovery continued in February, for both total employment and office-based roles. But the divergence in performance of the last two years is persisting, reinforcing our …
6th April 2022
Overview – We expect the best performing office markets over the next five years to be in Southern and Western metros, meaning that almost all the new additions to our forecast this quarter will outperform the six major markets. (See Chart 1.) Houston is …
31st March 2022
We think that property markets are the weak link when it comes to the impact of tightening monetary policy. A modest rise in interest rates might only cause price falls in a few obvious candidates. But rates might have to rise only a bit further than we …
25th March 2022
Data show continued wide divergence in the rate of metros’ recoveries The jobs recovery continued in January, but nearly two years on from the start of the pandemic, employment in most metros is still not back to its pre-crisis peak. And, in terms of …
18th March 2022
Overview – We expect the robust investment activity seen last year, particularly in H2, to persist into 2022. Although this has competed yields to record lows in the industrial and apartment sectors, we still see further room for yield falls this year in …
15th March 2022
Another month of decent net lending points to a solid start for investment The rate of commercial lending growth dipped a little in February but remained above its five-year average. That dip was due only to a slower month for multifamily, with net …
14th March 2022
Rental growth hit record highs last year as a wave of pent-up demand, plenty of savings, the need for more space and lack of homes for sale all drove rental household formation higher. But some of those factors supporting demand are now starting to fade, …
4th March 2022
This Update forms part of a set of publications that extend our existing office and apartment market analysis beyond the six major metros. This month we will be publishing our new, expanded metro forecasts for the office and apartment sectors, which will …
3rd March 2022
There was little change to property valuations in Q4, with two major exceptions. Those were the industrial sector, which saw another decline in its valuation score, and a handful of Southern apartment markets, which dropped into the overvalued range. Both …
25th February 2022
This is our first US Commercial Property Metros Chart Book, which forms part of a set of publications that extends our existing analysis to a wider set of metros. As well as greater coverage of office and apartment metro markets, this publication also …
24th February 2022
While economic indicators point to slower growth this year, investors have so far been unperturbed, piling into the market in Q4 and driving record quarterly and annual investment totals. That was led by record activity in industrial and apartments, which …
18th February 2022
Commercial property debt growth strong again, but lower than recent months Commercial real estate debt growth slowed in January, although that still left it at a decent level. . At this stage it is difficult to be sure whether slowing growth indicates a …
14th February 2022
The exceptionally strong rebound in commercial property returns has been clear from the middle of last year. While this came earlier than most expected, we think it reflected special conditions and won’t last. Despite increased uncertainty from the …
11th February 2022
We believe the link between real estate cashflows and inflation to be overplayed, a view that is backed up by the evidence of the last 44 years. But there are exceptions. One of which is low vacancy rates, which support strong NOI growth, as we expect in …
10th February 2022
We think that elevated oil prices will help office-based employment in Houston to recover further in the coming months, but the shift to remote working will limit the associated boost to office demand. Looking further ahead, declining oil prices and high …
3rd February 2022
After seeing strong gains over most of 2021, household formation stalled in the final quarter. A lack of homes for sale and rent, and the soaring cost of both tenures, is constraining household formation. To the extent that it is affordability that is …
Employment fully recovered in just four of the 30 metros Progress in the labour market has been slow, with employment having recovered to pre-COVID levels in just four of the 30 metros. While Las Vegas and Orlando have seen decent job growth in recent …
2nd February 2022
Expectations for next 12 months become more upbeat Market sentiment picked up in Q4, driven by widespread improvements in conditions across sectors. Respondents are also becoming more upbeat about the next 12 months, with forecasts for rents and capital …
27th January 2022
Record capital value growth helps 2021 end on a high The NCREIF index saw its strongest ever quarterly price appreciation in Q4, with values up by 5.1% q/q, driving a quarterly return of 6.2%. That took annual returns to 17.7%, led by industrial, where …
26th January 2022
Office incentives packages rose to unprecedented levels in 2021, which supports our view that market conditions are weaker than asking rents suggest. Given our expectation that vacancy will remain elevated in the coming years, incentives are likely to …
19th January 2022
Net lending ends 2021 on a two-year high Commercial real estate debt ended 2021 with its largest monthly increase since the onset of the pandemic. Against a backdrop of strong investment activity, we expect commercial property lending to have a strong …
17th January 2022
Real estate potentially has a significant role to play in helping achieve ambitious climate targets. We have estimated the size of the risks in the transition to net zero for the commercial property markets that we cover. This risk varies widely across …
14th January 2022
Combining the change in leased space with the rise in sublease availability gives a more complete picture of the change in demand across office metros since the onset of the pandemic. This gives a more intuitive match between demand patterns and rental …
11th January 2022
The US economy is set to slow this year as elevated inflation and higher interest rates squeeze spending. Nevertheless, at the all-property level, we expect rental growth of around 3% y/y and NOI yields to see another large fall, driving double-digit …
6th January 2022
2021 proved a challenging year to forecast commercial property markets. Indeed, we underestimated the speed and size of the bounce back in performance, albeit by less than the consensus. But there are lessons to be learned from last year’s experience, so …
5th January 2022
Overview – Our stronger national office forecast this quarter mean upgrades to all six major markets. The largest of those uplifts is in Boston, which has seen a sharp rise up the rankings and where we expect total returns to hit double-digits in 2021 and …
23rd December 2021
Overview – Apartment markets in major coastal cities underperformed the national average in 2021, as they were more heavily impacted by lockdowns and the move of some households to cheaper, sunbelt cities. But as long as Omicron doesn’t throw a spanner in …
17th December 2021
The rapid bounce-back in the US economy along with still-loose monetary policy will drive continued strong performance in real estate in 2022, when we expect returns to exceed 12%. That would see the US outperform the UK and euro-zone by 5%-pts and 3%-pts …
15th December 2021
Commercial property lending maintains momentum Commercial real estate debt recorded its largest gain in November since the onset of the pandemic. And with investment volumes on track for a record-breaking year, we expect lending activity to remain …
13th December 2021
Overview – The major change to our forecasts this quarter is that we now see strong demand for assets persisting well into 2022 and pushing yields down further. That is true in all sectors, with retail and offices joining the party, but with industrial …
10th December 2021
The pandemic turbo-charged a move away from major coastal cities, and that drop in demand led to a sharp fall in their rents relative to the national average. But with those moves now made and cities reopening, we doubt they will continue to get cheaper. …
9th December 2021
Office jobs fully recovered in 17 metros; easing virus cases benefit the South The easing of the Delta wave of infections in the South boosted leisure & hospitality hiring in October. Meanwhile, office-based jobs rose in all 30 metros, following …
2nd December 2021
Against both our proprietary in-house valuations and a more traditional fair value analysis, real estate looks cheap despite recent yield falls. Indeed, our analysis suggests yields could fall by 30bps by end-2023 and still be fair value. But as this …
1st December 2021
Rising equity earnings yields and government bond yields squeezed property valuations in Q3. While pricing still looks reasonable at the all-property level, the industrial sector is starting to look overvalued on a historical basis, with yield falls …
24th November 2021
Data show a vast divergence in performance across the industrial sector over the last year. While some of the strength is consistent with that in the apartment and office sectors, driven by migration to the South, others have been supported by …
23rd November 2021
Google mobility data show a much fuller recovery in visitors returning to retail and recreation than to the workplace. This supports our view that structural changes will weigh on the office sector more than retail over the next few years, helping to make …
19th November 2021
Economic growth slowed in Q3, but we expect it to pick up again in Q4. And with earnings growth and inflation at high levels, we see the Fed Funds Rate and 10-year bond yields rising over the next few years, reflecting the upturn in economic activity. …
18th November 2021
Lending set for strong finish to the year Outstanding real estate debt increased for the fifth consecutive month in October, driven by positive net lending in both residential and commercial real estate (CRE) sectors. We think that this reflects the rapid …
12th November 2021
The faster-than-average recovery in financial sector employment in the Miami metro owes much to new office openings by banking and finance firms in the last 18 months. This has made Miami one of the best-performing office markets since the end of 2019 and …
8th November 2021
REIT pricing appears consistent with our view that retail values are nearing a turning point while office values have a bit further to fall. But a strong recovery in industrial and apartment REITs means that there is some upside risk to our capital value …
4th November 2021
Austin, Phoenix and Tampa regain job shortfalls, while six major metros lag While the 3m/3m growth rate was positive in all metros in September, employment fell in Baltimore, Detroit, Los Angeles and Pittsburgh on the month. That left employment in just …
3rd November 2021
Recent data releases and surveys show a booming commercial real estate market, particularly in the industrial and apartment sectors. While the level of prices is raising some eyebrows, we don’t see cause for concern yet. Nevertheless, we expect the rate …
2nd November 2021
Survey indicators suggest quarterly capital growth may have peaked Overall sentiment saw little change this quarter, but there was a notable reduction in office occupier demand and three-month rent expectations. The bigger picture is that, with no …
28th October 2021
