US Commercial Property
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Property valuations stabilise in Q2

Following a sharp deterioration in the previous quarter, property valuations held steady in Q2. But while changes so far in Q3 point to only a slight worsening in valuations, we expect Treasury yields will turn a corner and rise to 1.75% by end-2021, which will squeeze property valuations further. Movements in valuation scores were split between sectors this quarter, with a worsening in valuations leaving apartments and industrial looking fairly valued whereas a rise in our scores for office and retail made these sectors look relatively cheap. But the bigger picture remains the same, as we think that “average” office and retail assets will need to see further yield rises before they truly represent good value to investors.
Sam Hall Assistant Property Economist
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US Commercial Property Update

Surging incentives reveal weakness in the office market

Office incentives packages rose to unprecedented levels in 2021, which supports our view that market conditions are weaker than asking rents suggest. Given our expectation that vacancy will remain elevated in the coming years, incentives are likely to diminish only gradually.

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US Commercial Property Data Response

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17 January 2022

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Comparing office occupancy changes across US metros

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US Housing Market Data Response

Housing Starts (Jul.)

Single-family starts edged back in July, although they but remain elevated compared to pre-COVID levels. Shortages in lots, labour and materials are weighing on builder confidence and housing starts. But falling material prices should enable builders to work through their large backlog of delayed projects, which will help starts average 1.15m annualised this year.

18 August 2021

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Mortgage Applications (Jul.)

The recent decline in mortgage rates buoyed refinancing activity in July, but didn’t prevent another month of declining home purchase activity. While market conditions are tight, there are still plenty of households looking to buy, which is why we expect housing demand to stay close to its current level in H2 2021.

4 August 2021

US Housing Market Update

Increase in build-for-rent won’t derail SF rent growth

Surging demand for single-family homes has revived institutional investor interest in the single-family rental (SFR) market. With few homes available to buy, interest in build-for-rent (BFR) investment is growing. But given constraints in the home building sector and the small share of the market that institutional investors occupy, the impact on supply from the recent uptick in BFR development will be small. As a result, we expect market conditions to remain tight, supporting rental growth in the next year. Due to wider interest, this US Housing Update is also being sent to clients of our US Commercial Property Service

3 August 2021
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