Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
Commercial real estate transactions are on course to fall by nearly 50% this year, despite a strong Q1. And with the latest data hinting that our downside scenario is now looking more likely, volumes could still end next year 40% lower than before the …
3rd September 2020
Retail malls are set to fare badly in this downturn as Americans avoid enclosed spaces and adopt online shopping practices. But regional and super-regional malls, which were already underperforming before the outbreak as tenants shuttered stores and …
28th August 2020
Given uncertainty around the level of adoption of remote-working, change in space allocated per worker and how large any reduction in supply might be, we provide a set of potential scenarios for the change in required office space and the effect on …
24th August 2020
Property valuations improved substantially in Q2, on the back of a huge 120 bps drop in equities earnings yields. However, while the office, retail and apartment sectors look undervalued on our valuation measure, with income streams likely to fall over …
20th August 2020
Loan payment deferrals in worst-hit sectors could be clouding the picture July’s increase in real estate debt was mostly driven by residential loans, but commercial property debt also ticked higher. However, with investment totals weak in Q2, this could …
14th August 2020
Occupier demand slowed further in Q2 and although completions were exceptionally weak, vacancy rose in most sectors. As a result, rental values fell in the office, retail and apartments sectors, while industrial rents only nudged higher, with the weakest …
We think that the enforced remote-working experiment of recent months will cause a dramatic demand shift in the office sector, with as many as 50% of office-based employees working from home at least once a week. Even with a heroic supply response through …
6th August 2020
We expect office-based employment growth to be faster than total employment growth by around 0.3-0.5% ppts each year over the next decade in the US, the UK and the euro-zone. The coronavirus crisis will dampen the outlook in the short run, but the less …
4th August 2020
Office and retail sentiment deteriorates, industrial bounces back Commercial property agents reported a worsening in activity and forward-looking sentiment for both the office and retail sectors this quarter. In contrast, there was a sharp improvement in …
30th July 2020
Returns fall sharply in Q2, with more pain expected in H2 As expected, all-property total returns turned negative in Q2, led lower by sharp markdowns in the retail and hotel sectors. And, while rental values and capital values fell in all sectors last …
27th July 2020
Despite the stronger-than-expected rebound in US high street sales, retail property still faces greater uncertainty than any other commercial sector. Not only does the upsurge in virus cases present a renewed near-term risk, but the inexorable rise in …
23rd July 2020
Debt covenants generally look less stretched in this downturn than during the GFC. And, although interest cover ratios are relatively low in some REIT sub-sectors, the short, sharp, fall in capital values that we are forecasting means that it is unlikely …
16th July 2020
Global property markets are expected to see a lasting impact from the effects of the COVID-19 outbreak. Over the coming weeks, we will publish a series of pieces looking at the post-pandemic future across the main property types. We start this by …
15th July 2020
Commercial property lending weaker again as transactions slow markedly Total debt secured against real estate nudged lower again in June. More timely weekly data point to signs that residential lending has already begun to grow again as housing demand has …
10th July 2020
CMBS delinquencies have risen sharply in recent months, yet we aren’t expecting a repeat of the real estate debt meltdown witnessed in the GFC. However, non-performing loan rates are especially high in the retail and lodging sectors, meaning that holders …
8th July 2020
We expect real estate yields to spike this year due to both a rise in the property risk premium and lower expectations for property income streams. However, breaking down the observed yield gap into rental predictions and the risk premium has more than …
2nd July 2020
The hit to apartment absorption from the coronavirus has occurred at the same time as a large number of new units are set to enter the market. Even with current tenants staying put, that raises the risk of a spike in the vacancy rate. However, …
1st July 2020
It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government policies, many economies should be able more or less to …
29th June 2020
With the largest fall in occupier demand expected in New York City (NYC) and San Francisco (SF), and completions staying relatively strong in Los Angeles (LA) and SF, we expect these cities to see the largest rental declines and yield rises this year. On …
26th June 2020
Overview – In the absence of a full-on second wave of the virus, we expect a strong economic recovery in the second half of the year and into 2021. Nevertheless, we expect occupancy to fall this year as absorption turns negative in most sectors, prompting …
17th June 2020
Commercial property lending started to fall in late May Debt secured against real estate fell in May. While this was mostly driven by a decline in outstanding residential loans, weekly data show that debt secured against commercial property flattened out …
12th June 2020
The factors that drove the resurgence in home purchase mortgage demand, including record low mortgage rates, the need for more space and the anticipation of finding a bargain, will not give a similar boost to apartment rental demand. Low interest rates …
11th June 2020
As US states emerge from lockdown and the worst of the economic crisis appears to be over, thoughts are turning to the recovery. In this, not all parts of the US will be equal. Some insight into the resilience of markets can be gained by looking at …
5th June 2020
In a world in which central banks and governments are likely to ensure that sovereign bond yields stay low for the long-term, real estate is well-placed to benefit. Therefore, although we expect property yields to rise this year, we still expect …
4th June 2020
The partial recovery in REIT prices since their late March trough gives further support to our view that all-property capital value falls will not exceed 10% this year. But, with data centres, single-family homes and self-storage outperforming in recent …
29th May 2020
Property valuations improved markedly in Q1 thanks to a more-than 120 bps fall in Treasury yields as investors flocked to safe-haven assets. This marked the fifth consecutive quarter of improving valuations, with the apartments and retail sectors nudging …
27th May 2020
Consensus downgrades suggest a more downbeat mood Forecasts for all indicators in 2020 have shown a marked deterioration since the interim year-end 2019 forecast published in January. While the consensus sector ranking is in line with our March forecasts, …
21st May 2020
Measures to slow the spread of the virus have had a hugely detrimental impact on the US economy. This began to hit occupier demand in Q1, but is yet to be reflected in dramatic changes in vacancy or falls in rents. Nevertheless, valuers have already …
20th May 2020
Commercial property lending slowing, but held up by refinancing The stock of outstanding debt secured against commercial property grew again in April. But lending started to fall back in the second half of the month as demand for and supply of new …
15th May 2020
Our initial expectations that office landlords would see only a limited and short-lived fall in occupier demand have given way to a growing likelihood of a more adverse outlook. We have therefore downgraded our forecast for rent growth this year from …
13th May 2020
In light of the pandemic, our forecasts for developed market commercial property returns have been revised lower. Nevertheless, the relativities between the key markets are broadly unchanged, meaning that we still expect the US to outperform the UK and …
6th May 2020
Sharp deterioration in activity and expectations, but worse to come Commercial property agents reported a dramatic deterioration in activity in Q1 and a commensurate fall in expectations for both rents and capital values. But with lockdowns extending deep …
30th April 2020
Commercial real estate returns dip in Q1, but likely to turn negative in Q2 Data for the first quarter show that all-property total returns saw their weakest quarterly performance since the tail-end of the GFC. Given that occupier market conditions have …
28th April 2020
Relative to its performance in the GFC, the office sector should be fairly resolute in this downturn. However, the rapid growth of flexible office space poses a downside risk in some markets. What’s more, if the problems facing WeWork were to turn into a …
27th April 2020
Jobless claims have reached 26 million, but by the end of last week the share of apartment tenants making a full or partial rental payment in April was down by just four percentage points compared to usual. That demonstrates tenants are still incentivised …
24th April 2020
After a decade of relatively cautious real estate lending and steady, rather than stunning, economic growth, office development has remained fairly subdued. What’s more, for both practical and economic reasons, we see completions dropping back in the next …
16th April 2020
Signs of slowing lending growth, but bigger shifts still to come The amount of debt secured against real estate and held by commercial banks continued to grow in March. But the bigger picture is that the rate of growth of lending is showing signs of …
10th April 2020
The nearly 40% peak-to-trough fall in US REIT prices points to a fall of around 5%-10% in direct real estate capital values, providing this proves to be a relatively short-lived recession. At a sector level, deeper falls for the retail sub-sector REITs …
8th April 2020
Retail property looks most heavily exposed to the disruption from the coronavirus crisis. But not all retail is equal and different sectors will see very different impacts. In our view, neighbourhood and community centres are better placed than either …
3rd April 2020
Elevated corporate bond yields suggest that property investors should be concerned about future cashflows. However, unprecedented policy support should help most companies stay afloat. And evidence from the start of the 2007-09 recession suggests that the …
1st April 2020
Overview – The spread of the coronavirus across the USA and the various containment measures will bring many businesses to a standstill. This will be reflected in rising vacancy across all four major real estate sectors. Rents will come under downward …
27th March 2020
Property has generally been at the centre of the most severe economic downturns in recent decades. But this time it is different. Although we think the commercial market is likely to experience a sharp jolt in 2020, provided the spread of the virus can be …
26th March 2020
Our base case points to investment activity falling by 45% this year, with Q2 and Q3 seeing particularly weak deal volumes, before a decent recovery in Q4. From a historical perspective, this would be a sharper fall than either of those caused by the 2001 …
18th March 2020
This Focus is a reference guide for clients of our new US Commercial Property service. It outlines the key pillars of our forecasting approach, updating previous methodological work from our established European and UK Property Services. Our five-year …
17th March 2020
Solid bank lending likely to unwind in the coming months The sum of outstanding commercial bank lending secured against real estate climbed to a new high in February. But with demand for new loans set to soften over the coming months as transactions …
13th March 2020
The additional cuts in the Fed Funds rate that we expect to see in the next couple of months, as well as the government’s likely fiscal support, will help shore up investor confidence. Despite a mechanical improvement in valuations, investment activity …
11th March 2020
The recent market meltdown reflects concerns about the economic impact of the COVID-19 virus. This will inevitably hit commercial property, but in our view, the downside is likely to be relatively modest. The spread of the coronavirus from Asia into …
6th March 2020
Property valuations generally improved a touch in Q4 on the back of a nearly 50bps fall in equity earnings yields as equity prices rose. This was the fourth consecutive quarter in which valuations had improved, albeit the smallest improvement in that …
5th March 2020
In light of the accelerating spread of the coronavirus – and the economic disruption that is likely to follow – we are pulling down our GDP growth forecasts for Q1 and Q2 of this year. Growth is likely to rebound over the second half of the year, but most …
2nd March 2020
Last year saw a fall in foreign investment into US commercial property, but South Korean inflows bucked the trend. This year could see a similar level of activity from Korean investors, but given their return targets, we don’t expect a resurgence to …
28th February 2020