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ULI Consensus Forecast (Spring 2021)

Consensus forecasts for the next two years have been revised upwards, largely driven by a more upbeat view on the industrial sector. As a result, we are now more downbeat than the survey respondents about the 2021-22 period.
Sam Hall Assistant Property Economist
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US Commercial Property Data Response

US Metro Employment (May)

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 the gap with Austin, where growth has slowed in recent months. Looking ahead, we still see growth in the south outstripping the north in the remainder of this year. Real Estate Drop-In (6th July, 2022): Join our US Commercial Property team for this 20-minute briefing on why we think this is the market top – and how far we expect returns to fall. Register now.

29 June 2022

US Commercial Property Update

Calling the top for US commercial real estate

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% correction at the all-property level over the next couple of years, which would be a little less than implied by the falls that we have seen so far in US REITS.

24 June 2022

US Commercial Property Outlook

All-property returns to fall to zero next year as values slide

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 Treasury yield moving toward 4% by year-end, something has to give. We now expect property yields to climb by a cumulative 40-50 bps over the next few years. This will hit all sectors, although the elevated level of retail yields at present may spare them the worst, particularly in terms of the impact on capital values. All-property returns are still forecast to be 8% this year, but they will then drop to 0% next year and just 2.5% in 2024. We are still forecasting industrial returns of 18% this year. But beyond that the sector will be a major drag on returns in 2023-24, meaning it would go from hero to zero in the space of a year.

21 June 2022

More from Sam Hall

US Housing Market Data Response

Mortgage Applications (Jun.)

Home purchase mortgage applications fell back again in June, leaving them down 23% compared to the 11-year high seen in January. Tight inventory and stretched affordability are largely responsible for the recent downward trend in housing demand and we expect these factors will persist throughout the year.

7 July 2021

US Commercial Property Data Response

US Metro Employment (May.)

Employment growth in May was positive in all metros, largely driven by gains in the leisure & hospitality sector. This benefited Orlando, Los Angeles and Las Vegas the most, but still left employment around 10% below its pre-pandemic peak in the worst affected metros.

30 June 2021

US Housing Market Data Response

Case-Shiller/FHFA House Prices (Apr.)

House price growth gathered pace in April, with the annual growth rate hitting record highs on both the Case-Shiller and FHFA measures. But despite the pick-up in house price expectations, we don’t think a self-reinforcing bubble will form, nor do we expect values will crash. Rather, we think rising mortgage rates and stretched affordability will cool house price growth to around 7% y/y by the end of the year.

29 June 2021
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