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Highlights from CBRE’s 2022 U.S. Real Estate Outlook – WealthManagement.com

A strengthening economy will deliver strong fundamentals across all CRE property types and drive robust investment sales activity.

CBRE provided WMRE with an early look at its 2022 Real Estate Market Outlook.

The firm is maintaining a positive outlook for the broader economy and the commercial real estate sector itself in spite of some of the recent uncertainty over potential impacts of the COVID omicron variant and other risks.

The new variant may yet again push back a large-scale return to the offices, but overall economic conditions remain strong and “fiscal and monetary policy remains highly supportive of economic growth.” In addition, CBRE Global Chief Economist and Global Head of Research Richard Barkham wrote that “factors that held back growth in 2021—labor shortages, supply disruptions, inflation and other COVID variants—will ease. Monetary policy will tighten to keep longer-term inflation pressures in check, which may trigger some short-run volatility in the stock market, but it will not be enough to dampen investor demand for real estate.”

In fact, CBRE expects 2022 to set a new record for commercial real estate investment, facilitated “by high levels of low-cost debt availability and new players drawn to real estate debt’s attractive risk-adjusted returns.”

Industrial and multifamily should continue to to lead the way, but the strengthening office and retail sectors should draw interest as well, especially for investors in search for higher yields and better returns. 

Some key takeaways from the report include:

  • The supply/demand balance in the office sector will remain highly favorable for occupiers, but the pace of recovery will pick up following a sluggish 2021.
  • With hybrid work the new normal, office properties with amenities that enhance employee collaboration, connection and wellness will fare best.
  • Retail, by contrast, is seeing the effects of a longer-term transition, which has included pricing adjustments, low levels of new construction and beneficial investment in the best experiential and convenience-led centers. Sales-to-square footageratios are  urging and the demographic- and pandemic-induced shift to the suburbs will favor grocery-anchored and neighborhood centers.
  • 2022 will see slower demand for physical goods as the service sector reopens and attracts more consumer spending. This will give supply a chance to catch up with demand. Third-party logistics operators are beginning to dominate
    the sector and are looking to get ever closer to the end consumer.
  • Multifamily will continue its recovery in 2022, with downtown locations returning to pre-pandemic occupancy levels.
  • Single-family rentals in the suburbs will also fare well as some millennials leave the city to raise families.
  • A notable trend in the second half of 2022 will be the return of downtowns. As business and tourist travel picks up, we will see a sharp revival in the hotel sector in gateway cities, alongside the already recovering food & beverage sector. This, in
    turn, will stimulate the return to the office and the fuller recovery of downtown life. 

The following slideshow includes excerpts of the report along with the key industry stats guiding CBRE’s outlook. 

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