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US Metro Employment (Jun.)

Employment growth accelerated in June, helping office-based employment return to pre-pandemic levels in almost a third of metros. But the 3m/3m growth rate in total employment was highest in the metros with the biggest shortfalls, as the return to normalcy continued to drive employment gains.
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 Commercial Property Update

Why we expect a gradual recovery in lending

The recent gains in lender sentiment showed the real estate recovery is heading in the right direction. As lenders gain confidence, standards should start to loosen, and industrial and multifamily borrowers will continue to benefit. But uncertainty around the outlook for other sectors will limit the pace of the recovery this year.

26 July 2021

US Housing Market Data Response

Existing Home Sales (Jun)

Existing home sales edged higher in June, but the bigger picture is that housing market activity is cooling. Booming house prices, rising mortgage rates and tight inventory will weigh on demand this year. As a result, we expect sales to resume their downward trend to around 5.6m annualised by end-2021.

22 July 2021

US Housing Market Data Response

Housing Starts (Jun.)

Single-family housing starts rose by 6.3% m/m in June. Despite this, even after the sharp decline in lumber prices in recent weeks there are still signs that supply shortages are holding back construction. But as these constraints ease, builders will make a start on the backlog of delayed projects and that should help starts average 1.16m this year, up 16% on 2020.

20 July 2021
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