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Remote working fatigue won’t derail long-run adoption

Low utilisation of office space supports our expectations of weak short-term demand. And, despite some firms raising concerns over productivity as the current remote work “experiment” continues, there are good reasons to think that these will not have a major bearing on our longer-term expectations.
Kiran Raichura Senior Property Economist
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US Commercial Property Update

The six major markets will not be the only losers

Pandemic-accelerated migration patterns were already driving outperformance in the southern states. But they have also brought the poor performance of weaker markets to the fore. With those structural changes likely to continue to play out over the next few years, we expect metros such as Detroit, Indianapolis and Minneapolis to underperform in the coming years.

10 August 2022

US Commercial Property Focus

Ranking the US’s largest warehousing markets

We think that major distribution hubs, where rents are high and availability is low, will underperform their neighbouring markets over the next few years. Tenants will increasingly look past the major hubs in favour of nearby markets with better affordability and availability. Of these markets, we think that rental growth prospects are even better in the sunbelt due to the positive economic effects of inward migration. As a result, we think that prospects for the next three years are strongest in Memphis, Atlanta, Dallas, Houston, Philadelphia and Riverside.

4 August 2022

US Commercial Property Data Response

US Metro Employment (Jun.)

There was little evidence of any slowdown in June’s job figures, but the deep divisions in performance at the metro level remained. Dallas and Austin stood out on a range of comparisons, while Pittsburgh and L.A. continued to struggle.

3 August 2022

More from Kiran Raichura

US Commercial Property Update

Offices set for a prolonged performance divide

The pandemic has heightened occupiers’ focus on the quality and green credentials of the space they occupy. This trend is set to impact on demand, with modern, well-configured buildings with green building certifications set to attract tenants at the expense of older stock. We expect investors to increasingly differentiate between these assets in the next few years.

23 June 2021

US Commercial Property Outlook

Major Office Markets Outlook (Q2 2021)

The start to the year has been in line with our expectations, meaning that falls in absorption and rents have generally accelerated in the six major metros. Owing to their relatively low rents and smaller shares of tech workers, we expect Washington D.C., Los Angeles and Chicago to be the top performers in our forecast period, registering average total returns of around 3.5%-4% p.a. On the other hand, New York City and San Francisco are set to be the worst performers, with rents falling by 13%-15% peak-to-trough and capital values ending the period 15%-17% lower than at the end of 2019. Total returns for those two metros will therefore be sub-2% p.a. in 2021-25. Boston will outperform those two hard-hit metros, but not by a great deal, producing returns of 2%-2.5% p.a., only a little below the US average.

18 June 2021

US Commercial Property Data Response

Commercial Property Lending (May.)

Commercial real estate debt held by banks grew again in May. But while we expect growth to accelerate as the year progresses and confidence returns, investor caution toward the office and retail sectors will ultimately limit the pace of the recovery.

11 June 2021
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