Commercial real estate – How bad will it get? How surging interest rates and structural change are upending US, UK and European commercial property Offices Face The Biggest Value Falls Event CRE Drop-In: Office sector Armageddon – Who gets hit hardest? 26th July 2023, 4PM BST The meltdown in CRE that’s dominating headlines is a story centred on the office sector. But is this a US or global story and, 18 months into the most aggressive tightening cycle in a generation, is… Europe Commercial Property Update Will there be a reckoning for European offices? The latest MSCI data indicate that values in western European office markets have held up better since the start of the pandemic when compared with the US and UK. But given these cities face similar... 16th June 2023 · 4 mins read 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 UK Commercial Property Update Offices drop-in: Answers to client questions Last week, we held a Drop-In on the future of office property. This Update provides answers for a variety of questions from a UK perspective that emerged from the discussion. 2nd August 2023 · 4 mins read Will Financial Distress Cause Bigger Downturns? Europe Commercial Property Update Sweden's property credit crunch intensifies The recent downgrading of Swedish property company SBB’s credit rating to “junk” and the ensuing market fallout have highlighted financing fragilities in the Swedish property market. But, while SBB is... 11th May 2023 · 4 mins read Capital View Commercial real estate’s threat to the banking sector is real So far at least, that’s what we’ve seen. CMBS spreads have blown out, with option-adjusted spreads on triple-B CMBS rising from just over 300 basis points in early 2022 to more than 900 bps last... 18th April 2023 Europe Commercial Property Update Weighing up the risks from open-ended property funds Recent turmoil in the banking sector has drawn attention to open-ended property investment funds (OEFs) due to their mismatch between footloose inflows and illiquid real estate assets. While we think... 11th April 2023 · 4 mins read Europe Commercial Property Update The risks to banking from commercial property Real estate exposures have not been central to financial developments in Europe over recent weeks, but, as property prices correct after a decade of steady expansion, some strains are likely to emerge... 6th April 2023 · 4 mins read Chief Economist's Note Is commercial real estate the next shoe to drop? A degree of calm has returned to markets over the past week, but some sense of nervousness persists. The hunt is on for the next shoe to drop. Historically, problems in the property sector have been... 27th March 2023 US Economics Update Are small banks and CRE the next doom loop? Fears over small regional banks in the US have focused on the unrealised losses on debt securities and deposit insurance but, in what would have echoes of the savings and loan crisis, maybe we should... 24th March 2023 · 7 mins read UK Commercial Property Update How much of a risk does UK CRE debt pose? The UK commercial real estate (CRE) debt market seems to be in a better position than the US, where troubled regional banks were the main providers of finance. That said, credit conditions are also... 22nd March 2023 · 3 mins read US Commercial Property Update Where does property fit into the banking turmoil? While real estate is not the main cause of the current financial turbulence, as it was in the late 2000s, it has played an indirect role and may be implicated in any further instability. And property... 21st March 2023 · 4 mins read US Cities Face Divergent Outlooks 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 US Commercial Property Office Metros Outlook San Francisco and Seattle values to drop 40% in 2023-25 Further downgrades to our national office outlook have driven corresponding cuts to return prospects in our metro-level forecasts this quarter. San Francisco still has the poorest outlook, with our... 7th July 2023 · 12 mins read US Commercial Property Apartment Metros Outlook Clear split between weak west and strong south The latest economic and property market data support the view we’ve held since last year that there would be a growing differentiation between southern and western markets. We expect that to persist... 11th July 2023 · 7 mins read US Commercial Property Update How remote work could impact US city revenues On the back of the remote work revolution, US downtowns have seen reduced office-led footfall and rising crime rates. Cities will need to be proactive to drive conversion to alternative use and to... 15th August 2023 · 4 mins read Our Latest Forecast Views US Commercial Property Outlook Capital values to fall by another 15%, offices to fare worse The effects of March’s regional bank failures have yet to come through in the performance data, but transaction volumes have fallen off a cliff. Signs of distress in offices are growing as the sector... 29th June 2023 · 20 mins read UK Commercial Property Outlook Returns underpinned by income After a brief respite earlier this year, property yields are once again on the rise, driven by a further increase in gilt yields. We don’t expect a repeat of the surge seen last year, but we also... 21st August 2023 · 23 mins read Euro-zone Commercial Property Outlook Price falls slowing but poor rent outlook to drag on recovery The slowdown in rent growth at the start of this year is likely to persist given the weak economic backdrop. And although the property price correction has slowed, we think stretched valuations will... 3rd July 2023 · 35 mins read Europe Commercial Property Update Euro-zone crash now expected to match GFC slump While the macro backdrop was broadly unchanged, rents were stronger and yields were higher than expected in Q2, forcing us to re-examine our 2023 real estate view. As a result, we have edged down our... 31st August 2023 · 3 mins read
Event CRE Drop-In: Office sector Armageddon – Who gets hit hardest? 26th July 2023, 4PM BST The meltdown in CRE that’s dominating headlines is a story centred on the office sector. But is this a US or global story and, 18 months into the most aggressive tightening cycle in a generation, is…
Europe Commercial Property Update Will there be a reckoning for European offices? The latest MSCI data indicate that values in western European office markets have held up better since the start of the pandemic when compared with the US and UK. But given these cities face similar... 16th June 2023 · 4 mins read
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
UK Commercial Property Update Offices drop-in: Answers to client questions Last week, we held a Drop-In on the future of office property. This Update provides answers for a variety of questions from a UK perspective that emerged from the discussion. 2nd August 2023 · 4 mins read
Europe Commercial Property Update Sweden's property credit crunch intensifies The recent downgrading of Swedish property company SBB’s credit rating to “junk” and the ensuing market fallout have highlighted financing fragilities in the Swedish property market. But, while SBB is... 11th May 2023 · 4 mins read
Capital View Commercial real estate’s threat to the banking sector is real So far at least, that’s what we’ve seen. CMBS spreads have blown out, with option-adjusted spreads on triple-B CMBS rising from just over 300 basis points in early 2022 to more than 900 bps last... 18th April 2023
Europe Commercial Property Update Weighing up the risks from open-ended property funds Recent turmoil in the banking sector has drawn attention to open-ended property investment funds (OEFs) due to their mismatch between footloose inflows and illiquid real estate assets. While we think... 11th April 2023 · 4 mins read
Europe Commercial Property Update The risks to banking from commercial property Real estate exposures have not been central to financial developments in Europe over recent weeks, but, as property prices correct after a decade of steady expansion, some strains are likely to emerge... 6th April 2023 · 4 mins read
Chief Economist's Note Is commercial real estate the next shoe to drop? A degree of calm has returned to markets over the past week, but some sense of nervousness persists. The hunt is on for the next shoe to drop. Historically, problems in the property sector have been... 27th March 2023
US Economics Update Are small banks and CRE the next doom loop? Fears over small regional banks in the US have focused on the unrealised losses on debt securities and deposit insurance but, in what would have echoes of the savings and loan crisis, maybe we should... 24th March 2023 · 7 mins read
UK Commercial Property Update How much of a risk does UK CRE debt pose? The UK commercial real estate (CRE) debt market seems to be in a better position than the US, where troubled regional banks were the main providers of finance. That said, credit conditions are also... 22nd March 2023 · 3 mins read
US Commercial Property Update Where does property fit into the banking turmoil? While real estate is not the main cause of the current financial turbulence, as it was in the late 2000s, it has played an indirect role and may be implicated in any further instability. And property... 21st March 2023 · 4 mins read
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
US Commercial Property Office Metros Outlook San Francisco and Seattle values to drop 40% in 2023-25 Further downgrades to our national office outlook have driven corresponding cuts to return prospects in our metro-level forecasts this quarter. San Francisco still has the poorest outlook, with our... 7th July 2023 · 12 mins read
US Commercial Property Apartment Metros Outlook Clear split between weak west and strong south The latest economic and property market data support the view we’ve held since last year that there would be a growing differentiation between southern and western markets. We expect that to persist... 11th July 2023 · 7 mins read
US Commercial Property Update How remote work could impact US city revenues On the back of the remote work revolution, US downtowns have seen reduced office-led footfall and rising crime rates. Cities will need to be proactive to drive conversion to alternative use and to... 15th August 2023 · 4 mins read
US Commercial Property Outlook Capital values to fall by another 15%, offices to fare worse The effects of March’s regional bank failures have yet to come through in the performance data, but transaction volumes have fallen off a cliff. Signs of distress in offices are growing as the sector... 29th June 2023 · 20 mins read
UK Commercial Property Outlook Returns underpinned by income After a brief respite earlier this year, property yields are once again on the rise, driven by a further increase in gilt yields. We don’t expect a repeat of the surge seen last year, but we also... 21st August 2023 · 23 mins read
Euro-zone Commercial Property Outlook Price falls slowing but poor rent outlook to drag on recovery The slowdown in rent growth at the start of this year is likely to persist given the weak economic backdrop. And although the property price correction has slowed, we think stretched valuations will... 3rd July 2023 · 35 mins read
Europe Commercial Property Update Euro-zone crash now expected to match GFC slump While the macro backdrop was broadly unchanged, rents were stronger and yields were higher than expected in Q2, forcing us to re-examine our 2023 real estate view. As a result, we have edged down our... 31st August 2023 · 3 mins read
