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US Commercial Property

US Commercial Property Update

US Commercial Property Update

Southern apartment rent growth unlikely to last forever

Over our five-year forecast, we expect in-migration to the South will see apartment rents there outgrow the national average. But further ahead, the greater ability of supply to respond in the South means that, even if that migration persists, we do not think that rents in those markets will necessarily outperform. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

12 May 2022

US Commercial Property Update

Industrial demand returning to West Coast ports

Congestion at the ports of Los Angeles and Long Beach forced some container ships to reroute to the less busy ports of the Gulf Coast, supporting industrial occupier demand in those markets. But we expect that to be only a temporary switch, a view backed up by recent data. And the return of container ships to the West Coast will drive a resurgence in demand for its industrial markets. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

11 May 2022

US Commercial Property Update

Forecast downgrades, but the sky is not about to fall

Rises in short-and-long interest rates and the likelihood of further increases over the next 12 months pose a threat to real estate prices. While some have suggested that this will not derail market momentum (and price gains), an array of valuation measures point to the sector already being overvalued. Accordingly, following an exceptionally strong start to the year, we see yield falls and price hikes slowing at the all-property level over the course of the year and even going into reverse in the apartments sector in H2. The result of those changes is that our forecasts for all-property total returns have been cut to around 10% in 2022 and 4% in 2023, from our previous forecast of 12% and 6%. UK Housing Drop-In (10th May 10:00 BST/17:00 SGT): Economists from our property team are hosting a 20-minute briefing to explain why we think UK house prices are heading for a fall – and how bad the fallout will be. Register now.

6 May 2022
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US Commercial Property Update

Divergence in regional mall performance set to persist

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 observed since 2019 to persist over the next few years, with anchorless centres being repurposed and vibrant regional malls producing strong returns.

US Commercial Property Update

There is still likely to be a reckoning for offices

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 office vacancy and rents have not passed yet. In view of the wider interest, we are also sending this UK Commercial Property Update to clients of all our Commercial Property Services.

US Commercial Property Update

Winning and losing office metros from hybrid work

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 and business operations are likely to see a significant shift to homeworking. Overlaying these views onto metro level occupation mixes points to Las Vegas, Riverside and Memphis being amongst the relative winners, while the losers include Washington D.C., Seattle and San Jose.

US Commercial Property Update

Introducing our new metro employment forecasts

Our new metro employment forecasts point to underperformance by the six major metros in the next five years, both in terms of total and office-type employment. In contrast, Austin, Dallas and Phoenix are amongst the winners in both. These views will be reflected in our occupier demand forecasts for the apartments and offices sectors respectively, improving our ability to identify rental growth prospects across metros in our upcoming Metro Outlooks. 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 cover 17 US metros in total. Last week we published our new Metros Chartbook for the first time.

US Commercial Property Update

Global property returns not expected to defy gravity

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. In view of the wider interest, we are also sending this UK Commercial Property Update to clients of our European and US Commercial Property Services.

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