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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.
Sam Hall Assistant Property Economist
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US Commercial Property Chart Book

Another punchy quarter, but capital growth set to slow

Setting aside the drag from net exports on GDP growth, Q1 was another strong quarter for both the domestic economy and commercial real estate markets, highlighted by a record first quarter for investment volumes. But occupier demand is slowing in all four sectors (albeit from record highs in industrial) and the sharp hike in alternative asset yields is already squeezing property valuations. As a result, we think that investment totals should slow in H2 and commercial real estate yields, particularly in the apartment sector, will begin to rise.

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Commercial Property Lending (Apr.)

Lending growth accelerated in April, seeing the strongest monthly gain in over 12 years. And with transactions having seen a fast start to the year, we think there is more to come in the next few months. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

16 May 2022

US Commercial Property Update

Southern apartment rent growth unlikely to last forever

Over our five-year forecast, we expect in-migration to the South will see apartment rents there outgrow the national average. But further ahead, the greater ability of supply to respond in the South means that, even if that migration persists, we do not think that rents in those markets will necessarily outperform. Property Drop-In (19th May): What will rising interest rates mean for commercial property returns in the US, UK and Europe? Join our 20-minute briefing on the outlook for returns on Thursday. Register now.

12 May 2022

More from Sam Hall

US Commercial Property Data Response

US Metro Employment (Jul.)

Job growth showed no sign of slowing in July, with gains in the leisure & hospitality sector continuing to drive the recovery. This benefitted Boston, Washington D.C. and New York City significantly, but still left employment in the six major metros 5%-10% below their pre-COVID levels.

1 September 2021

US Housing Market Data Response

Mortgage Applications (Aug.)

With the share of households seeing now as a good time to buy at a record low, home purchase mortgage applications fell for the fifth consecutive month in August, leaving them down 25% from January’s 11-year high. But with the pace of declines slowing, we suspect mortgage applications will soon flatten out.

1 September 2021

US Housing Market Data Response

Case-Shiller/FHFA House Prices (Jun)

House price growth surged above 18% y/y in June, setting record highs on both the Case-Shiller and FHFA measures. However, demand has fallen back since the start of the year, and the timelier Common Haus Price Index points to a slowdown in the second half of the year. We therefore expect annual growth will fall back from 18.6% y/y in June to 10% y/y by end-2021.

31 August 2021
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