Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
The jump in multifamily housing starts in the first half of 2022 implies a surge in completions over the next couple of years to a multi-decade high. But while rental demand is now moderating, the continued lack of homes for sale means we doubt it will …
1st September 2022
Office employment showing signs of shrinking in some key office markets Almost all metros saw further gains in total employment in July, with Dallas continuing to lead, and joined by Houston, Charlotte and Miami as the fastest growers. But office-based …
31st August 2022
Despite a stabilisation in property yields, valuation scores fell again in Q2 on the back of further rises in alternative asset yields. Apartment and industrial pricing look most stretched, but also offer the best rental upside for investors. That …
26th August 2022
Q2 data showed a mixed picture across the three sectors. For offices, the northern coastal markets continue to lag, with rent growth turning positive but still weaker than most other markets. Houston had an awful quarter for demand, and new supply …
24th August 2022
As the economy slowed in Q2 and interest rates rose, investors appear to have become less willing to compete property yields lower and investment volumes look close to turning. While occupier demand was steady in most sectors, there were signs of a …
22nd August 2022
Another bumper month, but we expect lending growth to slow CRE lending was again exceptionally strong in July, outpacing even the gains seen in recent months. But with investment transaction totals softening in Q2 and our expectation of a further slowdown …
15th August 2022
Commercial property wasn’t initially hit by the worsening in economic conditions at the turn of the year, but there are now growing signs of anxiety. Not only that, but even if the economic gloom is short lived and any downturn is mild, we expect …
12th August 2022
Pandemic-accelerated migration patterns were already driving outperformance in the southern states. But they have also brought the poor performance of weaker markets to the fore. With those structural changes likely to continue to play out over the next …
10th August 2022
We think that major distribution hubs, where rents are high and availability is low, will underperform their neighbouring markets over the next few years. Tenants will increasingly look past the major hubs in favour of nearby markets with better …
4th August 2022
No sign of any convergence in metro trends There was little evidence of any slowdown in June’s job figures, but the deep divisions in performance at the metro level remained. Dallas and Austin stood out on a range of comparisons, while Pittsburgh and L.A. …
3rd August 2022
Sharp reverse in real estate sentiment in Q2 The latest RICS survey for the US highlighted the steepest drop in confidence since early 2020, abruptly reversing the building optimism of recent quarters. This adds to the growing evidence that the peak of …
28th July 2022
Annual returns now past their peak and set to slow further in H2 NCREIF total returns fell back again in Q2, dropping to 3.2% q/q from their end-2021 peak of over 6%, as higher interest rates and weaker growth hit property performance. We expect the …
26th July 2022
The contrast between the strong performance of the apartment sector and the weak performance of offices in the last two years has made office-to-residential conversions more viable, but the numbers still don’t appear to stack up in most cities. In fact, …
22nd July 2022
Signs of slowing momentum in CRE lending growth CRE lending growth was again strong in June, but outside of the multifamily sector, there are signs the rate of growth may have peaked. And with investment transactions slowing, we expect a significant …
18th July 2022
The large-scale deterioration in office NOIs that we predicted would occur by the end of 2025 appears, on the face of it, to be some way off. But offices are the only sector seeing rising delinquency rates, and with office utilisation rates topping out …
15th July 2022
Overview – Since the release of our previous Apartment Metro Outlook three months ago the interest rate environment has become more negative for real estate, and we now expect yields to rise in many metros this year and to see further increases in 2023. …
12th July 2022
Although we expect a comparable rise in interest rates to that which preceded the Global Financial Crisis (GFC), we think the risk of a credit-driven bust in the commercial real estate market is low. That reflects the much more conservative lending …
11th July 2022
Overview – In light of the deterioration in the economic environment, our office metro forecasts have been downgraded across the board. Those downgrades are driven by a substantial shift in our yield view, which mean that capital values in all 17 metros …
1st July 2022
Recoveries slowing but Dallas still powering on Employment growth slowed last month, but remained above its historic averages. The big gainer in May was Dallas, which recorded the strongest 3m/3m growth in both total and office-based employment, closing …
29th June 2022
Indicators that include a recently released investor sentiment survey and a sharp fall in REIT prices since the start of the year support our updated view that capital values will go into reverse in H2. In total, our latest forecasts call for a 6%-8% …
24th June 2022
Overview – The dramatic shift in the interest rate environment over the first half of the year means that we have brought forward (and increased) our forecasts for yield rises. Property valuations now look as bad as they did in 2007, and with the 10-Year …
21st June 2022
A recent MSCI article speculated that real estate investment could buck the deglobalisation trend given distinct features of the asset class, though we are not convinced that will bring many benefits. We have been writing about the end of globalisation …
14th June 2022
Lending growth maintains momentum in May Commercial real estate debt continued to grow at a decent pace in May, in line with the recent strength in investment activity. However, we expect a weaker economic backdrop to weigh on commercial property lending …
13th June 2022
The perception of Amazon as a bellwether for the industrial sector made the announcement that it had over-expanded in the last two years a potentially worrying one. But, the fact that Amazon is only cutting back on a small proportion of its space, and …
8th June 2022
Winning and losing metros increasingly reflect structural pandemic impact The ongoing jobs recovery continued in April, although employment remained below its pre-pandemic level in more than half the 30 metros covered. Those losers tend to be expensive …
1st June 2022
There was a huge deterioration in property valuations in Q1, reflecting the sharp rises in alternative asset yields recorded since the start of the year. The size of those yield rises mostly dwarfed the differences in property yield changes across sectors …
31st May 2022
Rental growth in NYC reached 22% y/y in Q1 2022, one of the fastest rates in the country. But we expect growth to cool rapidly from here and underperform other cities. The past surge in rents largely reflects a reversal of large falls in 2020, which …
25th May 2022
The metro level data confirmed another strong quarter for commercial real estate in Q1, though with the usual wide range of performance across sectors and cities. For offices, rents in the larger coastal markets continued to trail for the most part, while …
24th May 2022
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 …
20th May 2022
Rapid lending growth in April reflects record high investment activity 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 …
16th May 2022
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 …
12th May 2022
Congestion at the ports of Los Angeles and Long Beach forced some container ships to reroute to the less busy ports of the Gulf Coast, supporting industrial occupier demand in those markets. But we expect that to be only a temporary switch, a view backed …
11th May 2022
Rises in short-and-long interest rates and the likelihood of further increases over the next 12 months pose a threat to real estate prices. While some have suggested that this will not derail market momentum (and price gains), an array of valuation …
6th May 2022
Consensus forecasts hiked again, but pricing correction approaching Consensus forecasts for rents and total returns in 2022 and 2023 have been upgraded in all four sectors since the last survey. But those changes come with property pricing looking more …
4th May 2022
Recovery in sentiment broadens out in Q1, but unlikely to last The RICS Q1 survey showed a further improvement in sentiment, driven by more confidence in prospects for the office and retail sectors. However, since the survey was conducted, the outlook for …
28th April 2022
Still a long way back to previous peaks for some of the worst-hit metros The recovery in employment broadly continued in March. However, the laggards in the recovery still look many months away from previous peaks in terms of both total and office-based …
27th April 2022
Strong start to 2022, but higher rates will slow returns later in the year Total returns on the NCREIF index were strong again in Q1, at 5.3% q/q. That was led by industrial, where they reached 11% q/q, with apartments at just over 5% and the other …
26th April 2022
The squeeze on consumer incomes points to a tough couple of years ahead for regional and super-regional malls, which tend to be more reliant on discretionary spending than other retail property types. But we expect the divergence in mall performance …
22nd April 2022
We think the recent upturn in office market performance is largely down to the one-off release of pent-up demand and remain downbeat about future prospects. With occupancy still languishing and remote working firmly established, we think that the risks to …
21st April 2022
Structural changes to working patterns and the resultant shifts in office demand will vary by industry and job type. Occupations like life and physical sciences are likely to see a low adoption of remote work, whereas IT sector jobs and those in financial …
13th April 2022
Overview – Following a surge last year, rental growth at the national level is set to slow over the next couple of years as demand falls back and affordability constraints bite. (See Focus. ) Alongside a gradual rise in yields, that will bring total …
7th April 2022
Southern metros set to remain the big winners at the expense of the north The jobs recovery continued in February, for both total employment and office-based roles. But the divergence in performance of the last two years is persisting, reinforcing our …
6th April 2022
Overview – We expect the best performing office markets over the next five years to be in Southern and Western metros, meaning that almost all the new additions to our forecast this quarter will outperform the six major markets. (See Chart 1.) Houston is …
31st March 2022
We think that property markets are the weak link when it comes to the impact of tightening monetary policy. A modest rise in interest rates might only cause price falls in a few obvious candidates. But rates might have to rise only a bit further than we …
25th March 2022
Data show continued wide divergence in the rate of metros’ recoveries The jobs recovery continued in January, but nearly two years on from the start of the pandemic, employment in most metros is still not back to its pre-crisis peak. And, in terms of …
18th March 2022
Overview – We expect the robust investment activity seen last year, particularly in H2, to persist into 2022. Although this has competed yields to record lows in the industrial and apartment sectors, we still see further room for yield falls this year in …
15th March 2022
Another month of decent net lending points to a solid start for investment The rate of commercial lending growth dipped a little in February but remained above its five-year average. That dip was due only to a slower month for multifamily, with net …
14th March 2022
Rental growth hit record highs last year as a wave of pent-up demand, plenty of savings, the need for more space and lack of homes for sale all drove rental household formation higher. But some of those factors supporting demand are now starting to fade, …
4th March 2022
This Update forms part of a set of publications that extend our existing office and apartment market analysis beyond the six major metros. This month we will be publishing our new, expanded metro forecasts for the office and apartment sectors, which will …
3rd March 2022
There was little change to property valuations in Q4, with two major exceptions. Those were the industrial sector, which saw another decline in its valuation score, and a handful of Southern apartment markets, which dropped into the overvalued range. Both …
25th February 2022
