Skip to main content

Capital Economics

Who We Help
How We Help
Our Products
Resources
About
Request a trial

Sign in

How We Help

Macroeconomic Coverage

Data

Economist Expertise
How We Help

Macroeconomic Coverage

Data

Economist Expertise
CE Advance

CE Gateway

Consultancy
CE Advance

CE Gateway

Consultancy
About the Company

CE in North America

Careers

In the News

Our Awards

Contact
About the Company

CE in North America

Careers

In the News

Our Awards

Contact
Request a trial

Commercial real estate – More crisis or looming recovery?

This collection of analysis explores the outlook for US, UK and European markets

Latest analysis: Estimating distress amid growing market concerns

CMBS losses not a sign of widespread debt crisis

US Commercial Property Update

CMBS losses not a sign of widespread debt crisis

News that some top-rated CMBS in both the US and Europe are set to make losses is in line with our previous view that distress will ramp up in 2024. But, to date, the troubled securities have all been...

27th June 2024 · 3 mins read

How big a threat is debt distress in Europe?

Europe Commercial Property Focus

How big a threat is debt distress in Europe?

Falling interest rates will not prevent a rise in refinancing distress in Europe in the coming years – debt funding gaps will be large and forced selling will increase. However, financing pressures...

7th February 2024 · 20 mins read

Will commercial property distress spread to the UK?

UK Commercial Property Update

Will commercial property distress spread to the UK?

Distress in the US commercial property market is once again in the news, but the risk of that spreading to the UK is low. The rise in aggregate loan-to-value ratios to date looks manageable and with...

6th February 2024 · 4 mins read

Germany not the only source of debt distress in Europe

Europe Commercial Property Update

Germany not the only source of debt distress in Europe

Recent media attention has focused on the downturn in Germany and the travails of its lenders exposed to the crash in property values both domestically and in the US. While the focus on Europe’s...

1st March 2024 · 3 mins read

Distressing state of affairs for some multifamily investors

US Commercial Property Update

Distressing state of affairs for some multifamily investors

Recent headlines have drawn attention to the immediate risks facing multifamily investors and lenders. While we think this concern is appropriate, we think the biggest risks face assets financed at...

5th February 2024 · 5 mins read

Why we see more distress coming in 2024

US Commercial Property Update

Why we see more distress coming in 2024

We expect evidence of distress to ramp up this year as loan extensions end. Many borrowers will be forced to either inject new capital, return assets to lenders or sell into a soft market. Those...

22nd January 2024 · 4 mins read

Why have office delinquencies not hit GFC-era highs?

US Commercial Property Update

Why have office delinquencies not hit GFC-era highs?

The resilience of the US economy in this cycle means the rise in distressed assets has been much slower than in the GFC-era recession, as relatively few firms have gone bust. But the structural...

29th February 2024 · 4 mins read

Answering questions from our debt distress Drop-In

Europe Commercial Property Update

Answering questions from our debt distress Drop-In

This week we held a Drop-In on commercial property distress across the US, UK and Europe. Clients can access a recording here and find related analysis on our dedicated landing page. This Update...

16th February 2024 · 3 mins read

How Much Further Does The Downturn Have To Go?

Will delays to rate cuts hit capital values?

UK Commercial Property Update

Will delays to rate cuts hit capital values?

Inflation has been stickier than we had expected and we have therefore pushed back when we think the Bank will start cutting interest rates. That may put a little upward pressure on property yields...

4th June 2024 · 3 mins read

Why have the US and EZ downturns lagged the UK?

US Commercial Property Update

Why have the US and EZ downturns lagged the UK?

While the timing of the sharp hit to UK commercial real estate values owes much to the ill-fated “mini-Budget” of September 2022, we think the UK’s role in leading the valuation downgrades also owes...

28th May 2024 · 6 mins read

Downtowns will recover, but not any time soon

US Commercial Property Update

Downtowns will recover, but not any time soon

The gap between downtown and suburban office vacancy rates has widened alarmingly since 2020. This reflects pandemic-driven changes to working patterns, exacerbated by the cyclical slowdown. In our...

18th June 2024 · 3 mins read

Rising distress points to further value falls in Germany

Europe Commercial Property Update

Rising distress points to further value falls in Germany

While German property yields stabilised in Q1, further indications of rising distress give us confidence in our view that property values there have not yet reached the bottom.

29th May 2024 · 3 mins read

Further rises in property yields still on the cards

Europe Commercial Property Update

Further rises in property yields still on the cards

The weakness in euro-zone investment in Q1 highlights that the pricing correction to date has not been enough to entice investors back to the sector. Lower market interest rates will support the...

2nd May 2024 · 3 mins read

NCREIF Q1 NPI shows more pain to come

US Commercial Property Update

NCREIF Q1 NPI shows more pain to come

While the headline of the Q1 NCREIF NPI data (-0.9% q/q total return) suggests we could be near the end of the price falls, we think this simply stored up bigger falls for the rest of the year. The...

26th April 2024 · 3 mins read

What Will The Recovery Look Like?

Southern metros set to outperform

US Commercial Property Office Metros Outlook

Southern metros set to outperform

The office sector faces another two years of value falls, led down by Seattle and San Francisco, where cumulative declines will be around 25%-30%. But our latest forecasts highlight the brighter spots...

20th June 2024 · 7 mins read

Why we think yield compression will be limited

UK Commercial Property Update

Why we think yield compression will be limited

With inflation back to target the stage is set for a decline in interest rates. Indeed, we think that the 10-year gilt yield will have dropped to 3% by end-26. But we don’t think that will lead to...

21st June 2024 · 3 mins read

Tables turning in favour of southern European offices

Europe Commercial Property Update

Tables turning in favour of southern European offices

Indications that take-up stabilised across many markets in Q1 were encouraging. However, looking ahead we think the prospects for occupier demand are better in southern European markets.

6th June 2024 · 3 mins read

Residential outperforms within a modest recovery

UK Commercial Property Outlook

Residential outperforms within a modest recovery

Capital values for most property sectors are now close to bottoming out, but with yields set for a period of stability the recovery will be modest by past standards. We expect all-property total...

30th May 2024 · 27 mins read

Will the investment recovery be delayed?

UK Commercial Property Update

Will the investment recovery be delayed?

After a positive end to 2023 commercial property investment has since lost momentum, not helped by a rebound in interest rates. But we still think interest rates will fall back this year and, while...

12th April 2024 · 3 mins read

Why this will be the slowest global recovery on record

UK Commercial Property Focus

Why this will be the slowest global recovery on record

Relatively high interest rates and structural problems within offices will weigh on the commercial real estate recovery over the next three years. Indeed, we forecast the upturn will be weaker than in...

4th March 2024 · 21 mins read

Office values unlikely to regain their peaks even by 2040

US Commercial Property Update

Office values unlikely to regain their peaks even by 2040

The reduction in office demand due to remote work will cause a hit to net operating incomes on a par with, or worse than, that experienced by malls over the last six years. And in line with the...

22nd June 2023 · 4 mins read

What does the recent rebound in REIT prices tell us?

Europe Commercial Property Update

What does the recent rebound in REIT prices tell us?

At face value, the rebound in European equity REIT prices over recent months suggests that capital values could be nearing their trough. But the past relationship is weak and REITs have benefited from...

2nd February 2024 · 5 mins read

Where Are The Biggest Downside Risks?

Where are the risks from US commercial real estate greatest?

US Commercial Property Focus

Where are the risks from US commercial real estate greatest?

While we expect a more-than 20% peak-to-trough price correction for US commercial real estate, offices face a much tougher outlook, with large falls in net operating incomes compounding the broader re...

4th April 2023 · 14 mins read

Slower economic recovery is a risk for retail rents

UK Commercial Property Update

Slower economic recovery is a risk for retail rents

High interest rates have taken longer to percolate through the economy than we expected, but we now think consumer spending will contract over the next six months. That poses a risk to our retail rent...

20th December 2023 · 3 mins read

Share of remote work key to global office performance

US Commercial Property Update

Share of remote work key to global office performance

The wide divergence in global office market performance to-date has been driven by significant differences in the return to office and the impact that has had on occupiers’ leasing decisions. US...

29th April 2024 · 5 mins read

Expect subpar rental performance in Germany

Europe Commercial Property Update

Expect subpar rental performance in Germany

While rental performance in German commercial property markets has been relatively solid given the country’s poor economic performance over the past five or so years, we think this is set to end.

16th April 2024 · 3 mins read

Our Latest Forecast Views

Property values on course to fall by more than 25%

US Commercial Property Outlook

Property values on course to fall by more than 25%

The market remains in the doldrums, with the mood negative and activity weak. We think this summer could be the bottom for transactions, but we still see valuations needing to fall by another 12% from...

11th June 2024 · 21 mins read

Residential outperforms within a modest recovery

UK Commercial Property Outlook

Residential outperforms within a modest recovery

Capital values for most property sectors are now close to bottoming out, but with yields set for a period of stability the recovery will be modest by past standards. We expect all-property total...

30th May 2024 · 27 mins read

End of the correction in sight, but outlook remains gloomy

Europe Commercial Property Outlook

End of the correction in sight, but outlook remains gloomy

The price correction showed signs of stabilisation in early 2024, but we think further, albeit much smaller, value falls are to come as yields edge a bit higher. Values should bottom by year-end, but...

13th June 2024 · 32 mins read

Global Commercial Property Chartpack

Global Commercial Property Chart Pack

Global Commercial Property Chartpack

The slower adjustment to past rises in interest rates and a sharper hit to office demand is set to weigh on US property returns over the next couple of years. Overall, the UK is set to outperform over...

3rd July 2024 · 1 min read

Footer

Email
support@capitaleconomics.com

Phone Number
+44 (0)20 7823 5000

Capital Economics Ltd
5th Floor, 100 Victoria Street
Cardinal Place
London

Footer menu

SERVICES

CE Advance
CE Gateway
Consultancy

INSIGHTS

Chief Economist's Note
In The News
Upcoming Events

POLICIES

Privacy
Terms of Sale
Terms of Use
Modern Slavery Statement

ABOUT US

The Company
Careers
Contact Us

© 2024 Capital Economics Ltd. All rights reserved.