Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
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
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
The current economic downturn will mean that short-to-medium term property performance is under-par. But over a longer horizon, we expect real estate returns to reassert their traditional position somewhere between bonds and equities. Last year was an …
2nd March 2023
Q4 property valuation scores rose from their Q3 troughs, as equity earnings yields fell and property yields all increased. Even so, that left all major sectors still looking overvalued, suggesting yields have further to rise before property looks fairly …
23rd February 2023
Data for the fourth quarter showed a widespread deterioration in occupier demand in all three sectors. This was worst in some of the big six and West coast metros, with markets like Phoenix, Portland and San Jose joining San Francisco and Chicago in …
22nd February 2023
While the recent economic data have surprised on the upside, property market indicators were broadly worse than expected in Q4. Occupier demand softened, particularly in the office and apartment sectors, as concerns about the outlook weighed on firms …
17th February 2023
Slowdown in lending activity beginning to show in January The expected slowdown in net lending to real estate began to show in January. This was seen across all sectors and the latest Senior Loan Officer (SLO) survey suggested this will continue, as banks …
13th February 2023
Almost three years on from the pandemic, only middle-income households are yet to recover financially. In the face of a looming downturn, we expect this will drive growth for discounters as middle-income households trade down their spending habits, …
10th February 2023
We expect stretched affordability and rising unemployment to lead to an increase in rental arrears and evictions in the coming quarters, causing rental household formation to turn negative and apartment demand to soften. We have argued since mid-2022 that …
9th February 2023
We expect a further slowing in office completions over the next few years as a combination of factors weigh on the profitability of new projects. But our latest review of the metro-level completion forecasts saw large upward revisions for Austin, NYC and …
3rd February 2023
Office-based employment prospects have taken a dive Despite the solid payrolls data for December, there was a clear softening in employment growth in several large metros. But those that have performed the best since the pandemic continue to outperform, …
1st February 2023
Market sentiment declined further in Q4 as the outlook deteriorated The latest RICS Survey conveyed a further decline in confidence following a turning point in the previous quarter. Comments from surveyors point to high interest rates as the main …
26th January 2023
Sharper markdowns mean worst quarter for total returns since Q2 2009 The 4.45% hit to all-property capital values in Q4 was more substantial than our end-2022 forecasts implied, although recent news of bigger valuation markdowns in December made this less …
25th January 2023
We expect the slowdown in investment activity in the second half of 2022 to persist into the first half of 2023. But we think transactions will begin to recover later this year once interest rates have topped out and much of the valuation adjustment has …
20th January 2023
Lending activity still strong in December On the surface, net lending to real estate in December looks to have reached its highest since October 2008. However, this apparent spike in lending was almost entirely due to the addition of a recently-converted …
16th January 2023
Our updated remote worker metro ranking shows some important changes since the end of the pandemic, though the winners remain in the South. Nashville tops the table, having climbed seven places. Tucson and Memphis also climb into the top 10, with …
11th January 2023
A large part of the real estate sector’s carbon footprint is related to electricity production and so will shrink over time as the use of renewables continues to expand. The biggest challenges to reducing property sector emissions will be in emerging …
9th January 2023
Our key calls for 2023 highlight major shifts in the outlook for real estate. We expect all-property total returns to be negative for the first time since 2009. At a sector level, we expect retail to do best, ending industrial’s decade of dominance, while …
6th January 2023
While our forecast that the economy would slow in 2022 on the back of high inflation and Fed policy tightening was right, like every other forecaster we were surprised by its extent. This threw off our call for further property yield falls in 2022. But we …
4th January 2023
Click here to read the full report. We now expect a small fall in rents next year in a handful of metros as affordability constraints and falling employment take their toll on demand. At the same time, a wave of completions in some of the markets with the …
29th December 2022
Click here for full report: Overview – Consistent with our national office story, we expect a few years of insipid rent growth and returns for most US office markets. Expensive coastal metros will continue to see weak demand as high rates of sublease …
23rd December 2022
Click here to read the full report Overview – The sharp rise in interest rates this year has prompted a price correction, which is now coming through in valuation-based indices. Combined with the mild recession we are forecasting for 2023, this will weigh …
19th December 2022
This is part of a series of reports outlining our key macro and market calls for 2023. Click here to view the full series. Property markets rebounded strongly after 2020, in part boosted by favourable structural shifts brought on by the pandemic. But …
15th December 2022
On the face of it, the news of unlisted REITs reaching redemptions limits suggests cause for concern as it could point to forced sales over the coming months. However, both BREIT and SREIT have solid cash balances that can last through at least three more …
13th December 2022
Lending showed little sign of slowing in November CRE lending grew solidly again in November, at a rate close to the six-month average, with other commercial sectors picking up the slack from slower growth in multifamily lending. Although lending growth …
12th December 2022
The single-family rental market has been on a roll since the GFC and the pandemic provided a further boost. Nonetheless, while it may hold up slightly better than multifamily over the next year or so, affordability pressures mean that current rental …
8th December 2022
Property valuation scores fell further in Q3 as rises in alternative asset yields outweighed the marginal increase in all-property yields, but alternative asset yields have dropped back in Q4 to-date, meaning we may have reached a trough. (See Chart 1.) …
6th December 2022
Total employment grew across the 30 metros, but at a slower pace as labour market conditions continued to ease. With our proprietary indicators pointing to a 90% probability of an imminent recession, we maintain the view that those metros worst affected …
1st December 2022
Third quarter data showed growing evidence of a softening in tenant demand in many metros. In particular, demand appears to be slowing in a number of West Coast markets, as hybrid and remote work becomes embedded in work patterns and the cost of real …
29th November 2022
The sharp rise in Treasury yields this year has finally begun to feed through to the property data. Q3 investment activity fell by more than 20% on both a q/q and y/y basis, with loan originations also falling back notably. And valuers have begun to …
22nd November 2022
Our current view is that we see a mild recession in H1 2023, but if we were to see a more substantial drop in GDP, we think the extra downside impact would be felt most in the apartment sector. Indeed, if GDP were to fall by an additional 1% …
17th November 2022
Bounce-back in lending not expected to last CRE lending saw a surprise uptick in growth in October following a rebound in the multifamily sector, although net lending remains below the average for this year. Despite the bounce-back this month, we still …
14th November 2022
Widespread downgrades, but still well short of the negative returns we expect Consensus forecasts for 2023 have been downgraded pretty sharply since the Spring, but we don’t think they have gone far enough. While the consensus is predicting total returns …
10th November 2022
In line with changes in our global economic view, we have made significant downgrades to our commercial real estate forecasts for the next couple of years. As a result, we now expect a much bigger drop in property values next year that will cause annual …
8th November 2022
Lagging metros unlikely to reach pre-pandemic peaks anytime soon Employment continues to trend higher across the 30 metros, but nearly half remain short of pre-pandemic peaks, including all six major metros. Indeed, with job growth slowing, we don't …
2nd November 2022
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 …
31st October 2022
Occupier and investor sentiment turned negative in Q3 The RICS Q3 survey indicated confidence has continued to fall from last quarter, as occupier sentiment turned negative for the first time in 2022. With a US recession looking likely early next year, …
27th October 2022
Returns falling sharply and set to turn negative in Q4 As expected, NCREIF all-property total returns dropped back significantly in Q3, to just 0.6% q/q, as investor demand pared back in response to higher alternative asset yields and the poor outlook …
26th October 2022
Revenues in the hotel sector have recovered to near pre-pandemic levels after being the hardest hit by COVID-19. Although there are few signs yet of momentum slowing, we expect growth in the sector to stall until the end of 2023 as economic weakness …
21st October 2022
With a US recession looming, Kiran Raichura and Andrew Burrell held a briefing on the impact of weaker growth on commercial real estate returns and answering your questions. The team explained how our macro view of the US economy and policy will drive the …
20th October 2022
Lending growth begins to slow as economic headwinds mount CRE lending growth slowed significantly in September, with both multifamily and other commercial sectors seeing the smallest rise in outstanding debt for at least six months. We expect the rate of …
17th October 2022
The weaker economic growth outlook will weigh most heavily on the retail and apartment sectors, where we have made the largest downgrades to our rental growth forecasts. But the relatively small size of those revisions mean the impacts of higher bond …
14th October 2022
With a mild recession now built into our forecast, the outlook for commercial real estate performance has worsened. But because this is a relatively small downgrade and it is joined by an expectation that the Fed cuts rates sooner than previously thought, …
12th October 2022
Central banks have the tools to deal with liquidity crises arising from rising interest rates and falling asset prices. Instead, the bigger threat is that higher interest rates produce large and simultaneous falls in asset prices that threaten the …
11th October 2022
