Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
On the back of deeply negative office absorption last year and the continued flow of announcements from firms cutting their office space, we have made major revisions to our demand forecasts across our five-year horizon. The total drop in occupied space …
10th March 2021
Greater availability, lower prices and proximity to NYC have supported demand for Boston apartments during the pandemic. That implies demand may edge back as the country reopens, and some workers return to NYC. Rental growth is therefore likely to …
5th March 2021
A few weeks ago, we nudged up our Treasury yield forecasts for year-end 2021 and 2022, to 1.5% and 1.75% respectively. While intra-day yields exceeded 1.6% at one point last week, we don’t expect a continuation of those rises this year. And the bigger …
4th March 2021
In light of our latest long-term economic and financial market forecasts, we have revisited our views for commercial property performance over the next three decades. We think that average returns will be lower than in the recent past, but that property …
1st March 2021
On the back of rising Treasury yields, property valuations took their first hit in eight quarters during Q4. And, with Treasury yields climbing higher since, it is likely that valuation scores will fall further in Q1. Despite valuation scores declining in …
26th February 2021
Permanent increases in certain types of online sales will mean that regional and super-regional malls underperform the other retail sub-sectors for at least the next two years. Our forecasts point to another 12%-14% of capital value falls in 2021-22 for …
23rd February 2021
Fiscal and monetary stimulus have kept economic growth solid and will support a continued recovery. While this bodes well for occupier demand, structural factors have weighed heavily on the office and retail sectors. That weakness is set to persist this …
18th February 2021
Commercial property borrowing beginning to show signs of life Commercial real estate debt growth picked up in January, seeing its strongest rise since April. That likely reflects a sharp increase in investment deals completed at the tail-end of 2020. …
12th February 2021
The performance of the major FTSE NAREIT sub-sectors since the end of 2019 appears to suggest that our forecasts for 2021 might be too weak for industrial and too strong for the office and apartments sectors. But while we expect to upgrade our industrial …
10th February 2021
In our Future of Property research, we identified important post-pandemic shifts in most real estate sectors. How these trends interact will be key to the outlook for the urban locations where most real estate is clustered. We think it is premature to …
4th February 2021
The limited impact of the virus on New York City office construction means that we now expect at least 10mn sq. ft. of office space to be added across 2022-23. This could cause the vacancy rate to climb by 400-500 bps in the next three years. As a result, …
2nd February 2021
Big rise in share of surveyors who think the worst has passed Market sentiment remained close to cyclical lows, with rental and capital value expectations deeply negative for office and retail. But there are signs that the market is nearing a turning …
28th January 2021
We expect the boost in demand for life science product will support Boston’s office market. At the same time, office-to-lab conversions will limit the impact of a relatively large development pipeline, reducing the downside for Boston in the coming years. …
27th January 2021
Nascent signs of investors returning pose an upside risk to the outlook All-property total returns strengthened in Q4, broadly as we had expected. And the data continued to point to the importance of sector selection to returns. Perhaps the real surprise …
26th January 2021
Leisure and hospitality re-openings were behind the strongest job growth in the Autumn, although national data for December suggest that this could be reversed on the back of renewed lockdowns. With the sector still well short of previous peaks, we think …
22nd January 2021
Commercial property debt to see slow growth in the first quarter Commercial real estate debt growth slowed in December, probably reflecting a softening in investment activity on the back of renewed lockdowns. This points to a similarly slow start to 2021 …
15th January 2021
Many commentators are arguing that firms will shift towards a “hub and spoke” model following the pandemic. But we think the arguments for this approach are not as strong as they first seem, and that other strategies will dominate in the years ahead. The …
12th January 2021
For 2021 we highlight five key calls. In particular we expect a year of two halves in which yields initially rise, but end 2021 close to their current levels. Retail and office rent falls will accelerate and while regional mall returns are expected to be …
6th January 2021
The pandemic – and the associated increase in working from home – may cause a fundamental shift in the way that cities function in future. But this shift will not necessarily trigger a more fundamental economic decline in the world’s largest urban …
5th January 2021
The hotel sector has been hit hardest by the virus, and we expect its recovery will be slower than the other sectors. And, even when vaccines pave the way for an improvement in occupancy, structural changes to demand may limit a return to former glories. …
22nd December 2020
The changes to our forecasts this quarter reflect two partially offsetting factors – downgrades to occupier demand, and upgrades to the yield outlook. We expect NYC and San Francisco to be the worst affected markets in the next three years, seeing average …
18th December 2020
As the country begins to return normal next year, the hardest hit apartment markets in the country will recover. New York City looks particularly well-placed to benefit from returning non-office-based workers. Combined with aggressive rent cuts, which …
16th December 2020
Rise in commercial property debt at risk from new lockdowns Commercial real estate debt growth accelerated in November. However, renewed lockdowns in many states may slow the recovery in investment activity, limiting debt growth in the next few months. …
11th December 2020
Overview – While the news of vaccines provides a fillip to our economic outlook, it does not have a major bearing on our occupier market forecasts. After all, we expect that structural change, rather than cyclical growth, will be the major driver of …
Our upcoming Outlook will detail major upgrades to our capital value expectations. Rather than a total fall of around 10% at the all-property level, we now expect the cumulative decline to be just 5%. In mid-November we published an Update which noted a …
3rd December 2020
News about a vaccine has boosted financial markets and we have revised up our global economic expectations for the next two years or so. But while we think that this bodes well for the medium term, next year is still likely to be tough for most property …
2nd December 2020
Property valuations improved for the seventh consecutive quarter in Q3, following another sharp fall in equities earnings yields. But this was the smallest rise in valuation scores this year and changes so far in Q4 point to a partial reversal. (See Chart …
24th November 2020
Although the economy partially recovered in Q3, it is still operating well below capacity. Lower employment will weigh on the consumer sector over at least the next year. Office and retail have been the hardest hit sectors, with office sub-leasing …
20th November 2020
Virus-driven behaviour changes that support a faster online transition will boost industrial demand over the coming years. But we don’t believe the view that higher online spending will cause rents to detach permanently from the underlying strength of the …
19th November 2020
Rising rental vacancy rates in large cities have not been accompanied by a surge in first-time buyers (FTBs). Indeed, 2020 saw the lowest share of FTBs since 1987. That implies many of those rental households who left large cities are either renting in …
18th November 2020
Commercial property debt stable again as repayments resume Outstanding real estate debt fell markedly in October, but this was fully driven by a drop in residential loan balances. Commercial real estate debt was up only marginally, but the bigger point is …
13th November 2020
Third quarter data make it look increasingly likely that our year-end price forecasts will prove to be too negative. However, with the UK still on course for a capital value fall of close to 10% this year, this doesn’t necessarily mean that the US or …
12th November 2020
Cities with a large tourism sector, such as Las Vegas and Orlando, still employ 10% fewer people than they did in February, which will hurt retail spending and apartment demand. And, while office-using jobs are holding up in tech-led cities, these have …
10th November 2020
The volume of available sublease space already exceeds that seen in the last two downturns. And an average discount of 20% to landlord asking rents, rising to 30%-plus in some cities, will reduce the demand for available landlord space. As a result, while …
4th November 2020
Surveyor sentiment still weak, but industrial outlook strengthens again Occupier market sentiment remained at cyclical lows, but there was a small sign of improvement in the investment market. But we expect that only to be short-term respite, as the …
29th October 2020
Returns improve in Q3, but significant risks to values ahead All-property total returns moved positive again this quarter, as valuation downgrades reduced markedly. A lack of forced sellers has limited transaction activity and reduced observable evidence, …
27th October 2020
Strongest month since virus onset, but unlikely to last The RCA Commercial Property Price Index for all-property nudged higher in September, driven by improvements in the office and apartment sectors. But, with the exception of the industrial sector, …
23rd October 2020
Outstanding commercial real estate debt held by banks is likely to rise again in the coming months, providing the improvement in investment transactions seen in September continues. Yet even if there were renewed lockdowns, the deferral of loan payments …
22nd October 2020
The industrial sector could see a further increase in its share of investment in the coming quarters thanks to both its own resilience and concerns surrounding the other sectors. Those diverging prospects are likely to mean that the negative yield gap …
19th October 2020
Upgrades to 2020, but consensus more downbeat on 2021-22 Consensus forecasts for this year have been revised upwards, although the outlook for total returns remains negative. At the same time, the prospects for 2021-22 have been downgraded, but only …
14th October 2020
Retail has been hit hard by the COVID-19 crisis and lasting changes to online spending will bring further pain. While our estimates suggest that the impact is likely to be less severe than structural change in offices, the rental outlook is expected to …
8th October 2020
While Joe Biden is currently favourite to win the election, we don’t think the winner’s identity will have a major effect on the economy. We also don’t expect it to substantially alter the prospects for the asset class as, in either case, monetary policy …
7th October 2020
Absorption is falling in all markets and vacancy is ticking higher, particularly in D.C. and San Francisco (SF). But more pain is to come, and we have significantly downgraded our forecasts for the next few years. SF has already seen a 60bps rise in …
2nd October 2020
While we continue to think that this year’s property downturn will be milder than in past cycles, next year’s recovery is looking more fragile. This in part reflects revisions to our economic view, but also structural changes which are weighing on the …
1st October 2020
Commercial property has outperformed both Treasuries and equities in the last two decades, but the fast-forward of structural change caused by COVID-19 will mean that in the next decade property is again likely to underperform equities. Over the last two …
25th September 2020
Low utilization of office space supports our expectations of weak short-term demand. And, despite some firms raising concerns over productivity as the current remote work “experiment” continues, there are good reasons to think that these will not have a …
23rd September 2020
Overview – While we expect the economic recovery to continue, there are downside risks in the next couple of years, particularly in the consumer sector. This will weigh on retail property, which we expect to be the worst-performing sector. The major …
21st September 2020
Non-bank lending may explain drop in outstanding residential debt Total real estate debt held its ground in August, as a rise in commercial debt was offset by a drop in residential. The rise in the former can be explained by rent arrears, particularly in …
11th September 2020
Even after the immediate threat of COVID has receded, we expect as many as 50% of office-based employees will work from home at least once a week. But the move away from cities and toward the suburbs should prove short-lived. Most of those leaving cities …
9th September 2020
In contrast to the surge in mortgage forbearance following the CARES Act, we doubt the recently announced eviction ban will trigger a jump in rental arrears. For those who can afford it, deciding not to pay the rent still comes with significant costs. …
4th September 2020