Filtered by Subscriptions: US Commercial Property Use setting US Commercial Property
While headline balances saw little movement, digging deeper the Q2 RICS survey shows a reversal of last quarter’s more positive outlook. Indeed, respondents seem more downbeat, with almost half now believing we are still in the downturn phase of the …
25th July 2024
With the share of non-performing CMBS loans on the rise, and plenty of loans set to refinance onto a higher rate this year, recent data provide further evidence that distress will rise both this year and next as we expected. However, while there is still …
18th July 2024
Many households have left western metros in favor of those in the South over the past two years. With remote working looking like a permanent fixture of office-based jobs and affordability significantly stretched in the West, we do not expect to see a …
16th July 2024
The legacy of the post-pandemic industrial construction boom is now being felt in rising supply across most metros. With the demand outlook stabilising, we think the evolution of supply will shape rental trends in the near term and that markets like …
9th July 2024
The slower adjustment to past rises in interest rates and sharper hit to office demand mean US property is set to underperform European property over the next five years. But unlike equities, we think US economic outperformance will translate into …
8th July 2024
This chartpack is a new addition to our suite of commercial property analysis, which pulls together our views across the three regions we forecast and provides important context for investors. The slower adjustment to past rises in interest rates and a …
3rd July 2024
Across the 17 metros we cover, most will see higher vacancy over the next year or so due to a surge in completions. Atlanta and Houston will be the key exceptions. There new construction has plummeted in response to falling apartment values and higher …
2nd July 2024
News that some top-rated CMBS in both the US and Europe are set to make losses is in line with our previous view that distress will ramp up in 2024. But, to date, the troubled securities have all been backed by some of the worst-performing assets across …
27th June 2024
After a strong recovery post-pandemic, momentum in hotel revenue growth is likely to remain subdued over the next few years. With a stronger US dollar hindering the revival of the tourist industry, we suspect metros such as Austin and Dallas will remain …
25th June 2024
The office sector faces another two years of value falls, led down by Seattle and San Francisco, where cumulative declines will be around 25%-30%. But our latest forecasts highlight the brighter spots in the South. Thanks to a smaller impact from remote …
20th June 2024
The gap between downtown and suburban office vacancy rates has widened alarmingly since 2020. This reflects pandemic-driven changes to working patterns, exacerbated by the cyclical slowdown. In our view, this shift cannot last. While any recovery will be …
18th June 2024
NB. Our new and improved interactive US Commercial Property dashboard, home to key macro and commercial real estate forecasts, can be found here . Overview – The market remains in the doldrums, with the mood negative and activity weak. We think this …
11th June 2024
Our 2020 analysis of the impact of changed working patterns on office demand correctly estimated the share of fully remote work, but underpredicted the extent of hybrid work. Yet with office job growth set to stay strong for the rest of the decade, the …
5th June 2024
Following the previous large quarterly increase, improvement in all-property valuations stalled in the first quarter of the year despite a rise in the 10-year Treasury yield. There was little change at the sector level. Industrial continued to look …
29th May 2024
While the timing of the sharp hit to UK commercial real estate values owes much to the ill-fated “mini-Budget” of September 2022, we think the UK’s role in leading the valuation downgrades also owes to its relatively insulated lending market in this …
28th May 2024
Weak investment activity and continuing cap rate rises in Q1 fit with our view for another tough year for real estate. All-property values are now down by 17% from their mid-2022 peaks. But we still think cap rates need to climb by c. 80-100 bps to reach …
22nd May 2024
The latest apartment rent data are consistent with our view that rental growth will be sluggish this year. Although single-family rent growth has fared better, we suspect it will soon start to slow again. Zillow reports that apartment rents continued to …
21st May 2024
The recent sharp drop in industrial REIT prices appears to have been tied to Prologis’ Q1 earnings call, which referred to especially weak leasing in Q1 and a cut to expected year-end net operating income. We aren’t too alarmed by either – slow Q1 …
17th May 2024
This note answers some of the most frequently asked questions that we received from clients during a recent online briefing about the latest US tariffs on China. Watch the original briefing here . What has been announced? Yesterday was the end of a …
15th May 2024
After a prolonged period of weakness, the West Coast ports have seen an improvement in trade volumes recently. However, industrial demand in these markets remains very weak and growing headwinds – most notably the threat of greater tariffs on Chinese …
10th May 2024
With downtowns generally suffering most from the growth in remote work, the hardest-hit cities such as San Francisco are now seeing this impact other revenue streams too, not least tourism. While there are promising signs that conversions from office to …
2nd May 2024
The wide divergence in global office market performance to-date has been driven by significant differences in the return to office and the impact that has had on occupiers’ leasing decisions. US markets have been the major losers, while those in …
29th April 2024
While the headline of the Q1 NCREIF NPI data (-0.9% q/q total return) suggests we could be near the end of the price falls, we think this simply stored up bigger falls for the rest of the year. The growing share of underwater loans, as well as the far …
26th April 2024
While overall surveyor sentiment remains negative, the Q1 RICS survey appeared to show a divergence in views between respondents of where in the cycle the market currently is. We think the apparent differences in views stem from the growing discrepancy …
The latest e-commerce statistics suggest that the pandemic has left US online sales on a permanently higher trend. That will be bad news for retail rents generally, though the detailed data also hint that there may have been a return to physical shopping …
23rd April 2024
The latest consensus figures have moved closer to our own total returns forecasts for the next three years. But they continue to expect a lower path for Treasury yields implying a smaller cap rate rise than us, which we think underpins the divergence …
9th April 2024
Note: We’ll be covering our views on residential market winners and losers in both the for-sale and rental markets in a Drop-In Tuesday 16th April 1100 EST/1600 BST . Register here for the 20-minute session. Our latest office metro forecasts highlight …
8th April 2024
Note: We’ll be covering our views on residential market winners and losers in both the for-sale and rental markets in a Drop-In Tuesday 16th April 1100 EDT/1600 BST . Register here for the 20-minute session. We expect a surge in completions and a …
4th April 2024
Note: We’ll be covering our views on residential market winners and losers in both the for-sale and rental markets in a Drop-In Tuesday 16th April 1100 EST/1600 BST . Register here for the 20-minute session. As mortgage rates fall, we think the …
25th March 2024
Note: We will be discussing the outlook for residential markets across the US in a 20-minute online briefing on Tuesday April 16th. Find out more here . Overview – This year is being flagged by many as the year the recovery starts, but there is still a …
22nd March 2024
Our updated remote worker preference scores again highlight Nashville as the most attractive metro for remote workers, while San Jose is the least attractive. The winners continue to be predominantly in the South, reflecting relatively low living costs …
13th March 2024
Commercial real estate investment saw its worst year in over a decade last year. Most brokers seem to expect a recovery in investment activity this year as the Fed cuts interest rates and distressed assets come to market. However, we think the effect of …
5th March 2024
Relatively high interest rates and structural problems within offices will weigh on the commercial real estate recovery over the next three years. Indeed, we forecast the upturn will be weaker than in any previous cycle across global markets. And with …
4th March 2024
The resilience of the US economy in this cycle means the rise in distressed assets has been much slower than in the GFC-era recession, as relatively few firms have gone bust. But the structural adjustment in office demand will ultimately have a similar …
29th February 2024
All-property valuations saw the largest quarterly increase in over a decade in Q4, as property yields rose across all sectors and the 10-year Treasury yield saw its sharpest quarterly decline since Q1 2020. At the sector level, industrial still looks …
26th February 2024
All-property values are down by 15% since mid-2022. But, with cap rates set to climb toward 5.5% by the end of the forecast period, we think capital value falls have some way to go still, with the total decline set to reach 26%. For offices, the …
20th February 2024
Following the huge fall in multi-family starts in January, we suspect the apartment sector will continue to be a drag on new development this year. But construction of single-family dwellings will remain strong. In January, housing starts suffered their …
19th February 2024
While we expect the office and multifamily sectors to account for the lion’s share of distressed assets over the next couple of years, there is an important distinction between the two. Unlike multifamily, we expect impacts on offices to be widespread, …
15th February 2024
Strong January lending growth not a sign of recovery yet There was a surprisingly sharp increase in the amount of outstanding commercial real estate (CRE) debt held by commercial banks in January, which rose by $10.7bn, the largest monthly increase …
12th February 2024
Western metros again at risk from announced layoffs Although December’s average job growth rate of 0.3% 3m/3m across our 30 metros signalled a tepid end to 2023, it brings to a close a surprisingly solid year for total employment. The same can’t be said …
6th February 2024
Recent headlines have drawn attention to the immediate risks facing multifamily investors and lenders. While we think this concern is appropriate, we think the biggest risks face assets financed at historically low fixed rates in 2020-21. Problems are …
5th February 2024
We think the recent divergence between the BLS measure of apartment rents and other sources is due to reliability issues with the former, which we expect will be revised higher in future releases. Therefore, while it currently points to a downside risk to …
31st January 2024
Typically, US REIT price indices have been a good indicator of the growth path for capital values in the direct market. That said, even though REIT prices rebounded in Q4 2023, we don’t expect the direct market to follow any time soon as the property …
30th January 2024
The worsening in total returns to -3.0% q/q in Q4 was consistent with our expectations of bigger-than-average year-end markdowns. But the major takeaway was that the data and NCREIF’s release notes support our view that there will be growing distress and …
29th January 2024
The Q4 RICS survey suggested that occupier and investment sentiment remained pessimistic in Q4. We expect sentiment will be subdued in at least the first half of 2024, with credit conditions staying tight and growing signs of distress, particularly in the …
25th January 2024
We expect evidence of distress to ramp up this year as loan extensions end. Many borrowers will be forced to either inject new capital, return assets to lenders or sell into a soft market. Those assets returned to lenders will also ultimately end up on …
22nd January 2024
We are downbeat on industrial total returns over the next two years compared to the consensus because of our relatively pessimistic views on both rents and cap rates. And we think the risks to long-term returns are skewed towards the downside, which, if …
16th January 2024
Tepid lending in December closes a sluggish year for activity Net lending on commercial real estate (CRE) by banks was positive again in December, rising by $4.2bn in the month. (See Table 1.) That said, the monthly change was broadly in line with the …
Our total returns forecasts for 2024 are significantly below consensus, as we predict that value falls will reach double digits for the second consecutive year. Retail stands out as the only sector where we expect positive returns, but distress in the …
9th January 2024
Office-based jobs contractions focused in Midwest and West Coast Total employment growth in November across our 30 metros was weak compared with the rest of 2023, growing by 0.3% 3m/3m once seasonally-adjusted. On average, office-based jobs contracted for …
4th January 2024