US Commercial Property
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Four likely winners in retail

The retail sector appears to be turning a corner, and we think that convenience-oriented Neighbourhood and Community (N&C) centres, out-of-town retail, “destination”-type malls and retail located in “desirable” southern metros are likely to be the sector’s winners over the next few years.
Sam Hall Assistant Property Economist
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US Commercial Property Data Response

US Metro Employment (Oct.)

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 widespread declines in September. That left office-based employment above its pre-COVID level in 17 metros.

2 December 2021

US Commercial Property Update

Fair value analysis points to one more year of yield falls

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 would leave property looking overvalued by 2024, we think the all-property yield is likely to fall by more like 15bps in the next 12-18 months. As apartment valuations will come under pressure first, yield rises in that sector are likely to start by early 2023.

1 December 2021

US Commercial Property Valuation Monitor

Industrial overvalued, but supported by rental outlook

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 showing no sign of slowing. At this stage, we think that industrial valuations are justified by the sector’s solid prospects for rental growth. But we expect 10-Year Treasury yields will rise to 1.6% by end-2021 and 2.25% by end-2022, which will squeeze property valuations further.

24 November 2021

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US Commercial Property Data Response

US Metro Employment (Aug.)

Delta variant fears resulted in leisure and hospitality employment falling in 12 of the 30 metros. Of these, Atlanta, Austin, Charlotte and Dallas were the worst hit. Leisure and hospitality employment remains below its pre-virus level in all metros, while office-based jobs have recovered their shortfall in 14.

29 September 2021

UK Commercial Property Data Response

Lending to commercial property (Aug.)

Net lending to property decreased for the third consecutive month in August, driven by falls in both lending for standing investment and development. Looking ahead, we think that tight credit conditions and the slow recovery in investment will weigh on lending to commercial property this year.

29 September 2021

US Commercial Property Update

Three reasons why Chicago will emerge a winner

Chicago’s office market will not escape the gloomy outlook caused by the shift to remote working. But we expect the low level of rents, the small share of jobs in the information sector, and a dwindling supply pipeline to limit rental declines over the next few years more so than in the other major metros.

17 September 2021
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