Industry insights, market outlook reports and commercial real estate
news, and trends from the Coldwell Banker Commercial brand.
Previous segments of this blog series touched on the disconnect between workers and employers, the shifting priorities and values of the general workforce and the role management and leadership plays in DEI initiatives. In this final installment, we dive into what it will take for savvy companies to position themselves for success.
In a reversal from sentiment at the beginning of this year, investors are becoming increasingly bearish about the commercial real estate market. Faced with an economic slowdown, inflation, rising interest rates, supply chain issues, labor shortages and the threat of a recession, investors and capital providers to take a step back and reassess their strategies as this year concludes and the next begins.
Commercial real estate activity remains elevated in 2022, which is a promising sign considering record-highs were reached last year. Market activity is being paced by three property types, multifamily, industrial, as well as a strong rebound in retail. A new Mid-Year Report from Coldwell Banker Commercial shows investors were eager to unlock cash flow and pushed cap rates to record-lows in 4Q21 and 1Q22 across most sectors. It is anticipated that demand for real estate will continue to be strong for high-growth markets. These positive signs comes despite widespread supply chain disruptions, inflation and political uncertainty around the war in Ukraine.
Despite uncertainty and volatility that cloud the economy, there’s reason to be a bit upbeat these days. A recent commercial property price report from researchers at MSCI’s RCA division shows the RCA CPPI National All-Property Index climbed 18.5% in June 2022 from a year prior. That’s close to the pricing growth rates of recent months and not far from the 19.5% record pace seen at the start of 2022. The index rose 1.3% from May.
A majority of adults in the United States currently have access to cannabis, whether medically or recreationally. As of this year, 19 states have legalized recreational cannabis use, while 39 states have legalized medical marijuana use. Over the years, the general perception of cannabis has evolved. Once seen as a danger to communities and to younger children, cannabis is now more readily available and marijuana sales produce taxable income for local economies.
The industrial market has stood as one of the hottest commercial real estate property sectors in the U.S. for several years. In fact, CommercialEdge just released its July national industrial report, analyzing?the U.S. industrial market’s performance through June 2022.?
The U.S. industrial market remains a darling among the major commercial real estate asset classes. A report by CommercialEdge showed that the performance of the sector and its rise in prominence in 2021 was largely driven by e-commerce. Researchers say despite a deceleration of e-commerce growth in Q3 2021, online sales are expected to continue fueling industrial demand into the future.
As we mentioned in part 1 of CBC’s 2022 Outlook blog post series, the CBC team recently released its outlook on 2022 commercial real estate trends, which you can access here. In the first part, we took a closer look into the confidence in the property market and how that helped to push commercial property values to a 15-year high in the third quarter, the increase in transaction volume in 2021, annual CRE sales volume by property type, and more. In part 2, we will provide insight that is backed by research and analytics, as well as explore a wide variety of real estate trends including the commercial real estate sales volume and investment surge by market, the build-to-rent trend, multifamily rent growth by market, and retail and industrial rent growth. After conducting extensive research, the CBC team confidently predicts that 2022 will be another strong year fueled by stable cash flows and pent-up demand.
The CBC team recently released its outlook on 2022 commercial real estate trends, which you can access the report here. The outlook provides insight that is backed by research and analytics, and explores a wide variety of real estate trends including, confidence in the property market, the increase in transaction volume, job growth and demand for commercial real estate space in secondary markets. The report notes that investors are capitalizing on rising rents and demand for space, points out what cap rates are in popular Sun Belt and secondary markets, highlights the build-to-rent trend for multifamily, observations of retail and industrial markets, the future of office demand, self-storage, and demand for medical space. After conducting extensive research, the CBC team confidently predicts that 2022 will be another strong year fueled by stable cash flows and pent-up demand.
Society of Industrial and Office Realtors (SIOR)’s latest Q3 2021 broker survey reveals that on-time transactions are at their highest level since the start of the pandemic, while cancelled and on-hold deals are at their lowest level. Additionally, SIOR notes in its Q3 2021 Snapshot Sentiment Report that leasing activity has hit another new high, showing that the pandemic’s impact on commercial real estate continues to wane.