Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
Total rise in July hides slowdown in commercial lending July saw the amount of outstanding debt secured against real estate rise (albeit marginally) after a sharp drop in June, driven by a strong rebound in residential lending. Across the commercial real …
14th August 2023
The data show a small, but limited, divergence in performance between overall class A and classes B and C office space. But that differential appears to have been driven by newly-built trophy space rather than the broader class A grouping. We expect this …
9th August 2023
Despite capital value falls of 7% and 9% to-date for industrial and apartments respectively, we are forecasting around 15% further value declines as cap rates rise. But the falls in appraisal-based indices appear to be lagging those in the market, where …
3rd August 2023
Office-based jobs suffering in western tech-led markets Seasonally-adjusted total employment growth rose by 0.6% 3m/3m on average across the 30 metros we track for the third consecutive month. But there has been clear weakness in the information sector in …
2nd August 2023
The latest RICS survey signalled a slight improvement in occupier and investment sentiment in Q2, but confidence remained low by historic standards. Tight credit conditions and a poor economic backdrop in the second half of this year suggest sentiment …
27th July 2023
Total returns were negative again in Q2 at -2.0% q/q. This was dragged down by the office sector, where values fell by 7% and quarterly returns were -5.8%, with all other sectors outperforming the all-property number. Nevertheless, we still think office …
26th July 2023
We have made only minor changes to our latest global forecasts which still imply that property will underperform other assets in the short to medium term. Further out real estate returns are set to recover, but, with yield spreads more compressed than in …
19th July 2023
Here are answers to some of the key questions that kept coming up during meetings with clients last week in New York and Chicago, and around my presentation to the NCREIF summer conference in Chicago . How bad will it get for offices? Our forecast for …
18th July 2023
The following is a presentation that Kiran Raichura gave to the NCREIF Summer Conference in Chicago on 12th July, 2023. … What does the new normal mean for real …
17th July 2023
Sharp drop in residential turned total lending negative in June Net lending to commercial real estate (CRE) in June was negative for the first time in over two years, but this was driven by a large drop in residential lending as elevated mortgage rates …
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 for the next few years thanks to the relatively high …
11th July 2023
Overview – 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 projections for demand implying vacancy rises …
7th July 2023
We recently held a Drop-in titled “Industry’s decarbonisation challenge – From aviation to property”, which you can view on-demand here . This Update addresses some of the questions we received during the event, including those that we did not have time …
3rd July 2023
Overview – 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 faces its own credit crunch, with very few …
29th June 2023
NYC employment finally returns to its pre-pandemic peak Total employment growth was resilient across metros in May, recording 0.6% 3m/3m on average. That growth was led again by Boston, Las Vegas and Charlotte, with San Antonio also seeing a rise of over …
28th June 2023
The reduction in office demand due to remote work will cause a hit to NOIs on a par with, or worse than, that experienced by malls over the last six years. And in line with the experience of malls, the structural nature of this hit to demand means the 35% …
22nd June 2023
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 long-term problems, we remain downbeat about the …
16th June 2023
Florida and other parts of the Sunbelt (notably major cities in Texas) will likely face the most severe physical climate risk over the next 30 years. While this is unlikely to come as a major surprise, we don’t believe that this risk is being consistently …
14th June 2023
Surprise increase in lending in May, but signs of distress growing While bank net lending to commercial real estate (CRE) turned positive again in May, growing signs of distress for existing loans point to further weakness ahead. (See Chart 1.) The …
12th June 2023
Our updated industrial metros analysis, which now incorporates the current vacancy rate, continues to point to Memphis as having the strongest prospects for rent growth over a three-year horizon. Miami, Orlando, San Diego, LA and Nashville also rank …
8th June 2023
Recent economic difficulties have forced online retail to tighten their returns policies. At face value, this seems good news for retail property as it may shift demand back to stores for certain categories. However the change is unlikely to be a big …
It comes as no surprise to see a sharp downgrade to consensus forecasts given the combined impact of the regional banking crisis and growing office sector distress. But despite those downgrades, our own forecasts are considerably more downbeat, …
2nd June 2023
Job growth holding up across metros; southern markets continue to lead Total employment growth reached a solid 0.7% 3m/3m on average in April for the second consecutive month, led by Boston, Las Vegas, Charlotte and Orlando. But for office-based jobs, …
31st May 2023
Our commercial property valuation scores rose sharply in Q1, suggesting that Q3 2022 was a trough in valuations. Office and retail sectors now look fairly valued. While we think retail values do not have much further to fall, concerns about the outlook …
26th May 2023
Metro level data for Q1 2023 showed the slowdown in occupier demand was widespread, with no market consistently outperforming across the sectors in terms of absorption. While office and industrial asking rents continued to grow, they did so at a slower …
24th May 2023
The economy has been relatively resilient so far, but with the banking turmoil set to weigh on activity, we continue to expect a recession this year. Slower growth has already translated to softer occupier demand across all property sectors. This will …
19th May 2023
Lending against commercial turned increasingly negative in April Net commercial real estate (CRE) lending slowed sharply once again in April. Lending against all commercial sectors turned negative for the first time in nearly six years, and with little in …
15th May 2023
The sharp rise in US manufacturing construction over the past two years is likely to continue into the medium term as firms take advantage of favourable government incentives. But as these expire, demand for the sector will wane as firms look overseas for …
12th May 2023
We think migration patterns of footloose workers will continue to play the largest role in driving the rental outlook across metros. But rent as a share of income will also have a bearing, weighing on prospects in major markets such as NYC, LA and Boston, …
9th May 2023
Metro employment growth remained resilient in March The rate of job growth in March remained virtually unchanged from the previous month, signalling resilience across our covered metros despite a slowdown in non-farm payrolls. Within the tech sector the …
3rd May 2023
Sentiment fell further in Q1 The RICS Q1 survey indicated confidence fell further in the opening months of the year but remains substantially above the lows seen during the height of the pandemic. However, we expect sentiment to drop further in the coming …
27th April 2023
Markdowns smaller in Q1, but this feels like the eye of the storm Total returns of -1.8% q/q in Q1 reflected a much smaller markdown in values than in Q4. But, looking ahead, we remain convinced that the strains being felt by many investors will drive …
26th April 2023
The physical risks facing commercial property are substantial with extreme weather events like floods and wildfires set to increase in both the US and Europe over the coming decades. Property markets have yet to fully price these in, especially in areas …
21st April 2023
March’s net commercial real estate (CRE) lending slowed sharply following SVB’s collapse early in the month. Lending against multifamily fell for the first time in 18 months, driven by a reduction in small banks’ exposure. Along with a softening in …
17th April 2023
Overview – We have made substantial downgrades to our metro-level forecasts this quarter. The outlook for office-based employment growth has been hit by tech sector struggles, weighing on demand in many western markets. We have also pushed through bigger …
14th April 2023
We expect a surge in completions and a slowdown in employment growth to push vacancy substantially higher in all markets over the next few years. That will slam the brakes on rental growth, causing an outright fall in several of the major markets as well …
12th April 2023
Overview – We have made substantial downgrades to our forecasts this quarter. Aside from their direct impact through tighter lending conditions, last month’s regional bank failures appear to be helping crystallise some of the risks to commercial real …
6th April 2023
Note: Office-based employment data for several metros were missing for February. February employment growth slowed after January’s high February saw a slowdown in jobs growth after a strong month prior, suggesting January’s jump in employment was an …
5th April 2023
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-pricing facing the sector and driving a …
4th April 2023
US regional banks’ higher exposure to CRE debt means we expect their struggles to weigh heavily on credit availability for commercial real estate investors. Even without building in second round effects on lending from other debt providers we expect this …
23rd March 2023
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 will also be vulnerable to the effects of recent …
21st March 2023
While the Credit Suisse rescue might draw a line under that particular institution’s problems, it is clear that confidence in the financial sector overall is still extremely fragile. So regardless of whether more financial institutions run into trouble, …
20th March 2023
Strong payrolls did not make it into the office January was an especially strong month for payrolls data, and this translated into positive employment growth across all 30 of the biggest metros. However, this was not the case for office-based jobs, as a …
17th March 2023
The direct impact on real estate of the collapse of two US regional banks over the weekend is likely to be relatively small. But we expect lending criteria to become more cautious in the short-term, which will weigh on the supply of real estate debt. …
16th March 2023
We have already outlined some different scenarios of how things might evolve from here and it is still possible that the situation calms down quickly. But in this Update , we think through how the more adverse of our scenarios might evolve. There are …
Slight uptick in February’s lending, but still below 2022 average Net commercial real estate lending ticked up in February following a slowdown the month prior. That said, monthly lending activity across all sectors remained below the average for 2022. …
13th March 2023
This dashboard shows our latest national sector-level commercial real estate forecasts for the next five years, as well as summary forecasts for a handful of core macroeconomic variables. If you have subscriber access to the data underlying this …
Failed dockworker union negotiations on the West Coast have led to further diversion of US imports toward the East and Gulf Coasts, supporting warehousing demand in those markets for longer than expected. We expect a degree of this demand to persist into …
10th March 2023
We expect industrial completions to exceed 3.5% of inventory this year, despite the first quarterly drop in space under construction in Q4 for over two years. But new starts are already slowing and with higher interest rates, elevated construction costs …
9th March 2023
Our new forecasts for metro employment growth have prompted limited change in the rankings for total jobs over the next three years. But, there are two shifts, both owing much to recent and likely further cuts in the tech sector. First, we think 2023 …
3rd March 2023
