Limon Net Lease Group

Archives for August 2021

GDP Research Brief | Q3 2021

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Economy Returns to Pre-Recession Levels, Fueled by Stimulus

  • Growth remains steady. In the second quarter, the economy expanded 6.5 percent on an annualized basis.
  • Retail and hospitality are real estate’s biggest beneficiaries. As the economy expands and residents take advantage of more options, retailers and tourist destinations are hosting more visitors.
  • Consumer spending drives GDP. Personal consumption grew at an annualized rate of 11.8 percent of GDP last quarter.

Headwinds Short-Term Concern

  • Rising COVID-19 cases cloud future. The much more transmissible Delta variant of the novel coronavirus is giving policymakers pause and could result in future restrictions that temper the economic recovery.
  • Government spending could amplify GDP. A $1.2 trillion bipartisan bill that will fund infrastructure projects over the next several years could support the publicly financed portion of the economy.

* Through 2Q
Sources: Marcus & Millichap Research Services; Bureau of Economic Analysis; National Bureau of Economic Research; Smith Travel Research; U.S. Census Bureau

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Employment Research Brief | August 2021

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Employers Sustained Aggressive Hiring in July as Delta Variant Overshadows Outlook

  • Unemployment steadily tightens. Job creation surpassed 900,000 new positions for the second consecutive month in July, lowering the unemployment rate 50 basis points month over month to 5.4 percent.
  • Retail and hotel fundamentals continue to improve. The leisure and hospitality sector again led hiring last month with the addition of 380,000 personnel.
  • Multifamily leasing resumes in force. Ongoing employment growth and the resumption of many normal routines bolstered household formation in the spring and summer, leading to a record number of apartments being absorbed in the second quarter.

Developing Trends:

  • COVID-19 variants complicate current outlook. The spread of the Delta variant raises concerns about economic growth in the second half of the year.
  • Higher wages, inflation may affect monetary policy. The number of unemployed fell to 8.7 million in July, below the 9.2 million jobs open in May.

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Back to School Season Special Report

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Resumption of In-Person Learning a Catalyst For Commercial Real Estate

  • Start of academic year unlocks employment growth potential. The return of students to classrooms this fall will stimulate economic growth in the U.S. According to a study by Morning Consult, nearly 2 million workers remain on the sidelines due to child-care challenges, an issue that will abate as primary schools come back into session and child-care tax credits reach parents.
  • Campus re-openings lift property demand. Parents’ school-related purchases and college towns’ economic recoveries will boost fundamentals across an array of commercial real estate sectors.

Key Features Include:

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2H21 National Office Outlook Report

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More Aggressive Demand for Space Likely As Clarity Emerges

  • Economic improvement aids office sector. The U.S. economy has gained traction since inoculations became widespread.
  • Hybrid work arrangements add complexity to space needs. More people becoming fully vaccinated is allowing employees to return to in-office schedules.
  • Updated amenities can enhance leasing efforts. Companies reassessing floor plates may pose challenges for office owners as more sublease space becomes available.
  • Bright outlook for life science office segment. The search for a COVID-19 vaccine sped up an already growing level of demand for office space from biotech and pharmaceutical companies.

Report Includes:

Click Here To View 2H21 National Office Outlook Report

*Forecast | Sources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics, Capital Economics; Freddie Mac; Moody’s Analytics;
Mortgage Bankers Association; National Association of Realtors; National Association of Home Builders; BLS; Federal Reserve; RealPage, Inc.; U.S. Census Bureau; Wells Fargo

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2H21 National Industrial Outlook Report

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Tenants Covet Space at Each Stage of Supply Chain; Investor Fervor Signals Long-Term Confidence

  • Comprehensive demand drivers strengthen outlook. The industrial sector is emerging from the health crisis well positioned to continue its upward growth trajectory even as the advancement of e-commerce returns to a more sustainable level of expansion.
  • Freight handling trends impact port cities. Consumers’ return to in-store shopping is extending a stretch of record import activity that began last summer.
  • Tech-centric industrial key to dual-channel alignment. Widespread vaccination and the reopening of economies has supported a significant return to in-store shopping across the nation; however, consumers’ reliance on e-commerce is not anticipated to fade.
  • A focus on emerging markets. Industrial users are upgrading distribution networks in secondary and tertiary cities, confident that the movement of families and individuals to areas of lower housing costs and reduced density is a long-term trend.

Report Includes:

 

Click Here To View 2H21 National Industrial Outlook Report

*Forecast | Sources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics, Capital Economics; Freddie Mac; Moody’s Analytics;
Mortgage Bankers Association; National Association of Realtors; National Association of Home Builders; BLS; Federal Reserve; RealPage, Inc.; U.S. Census Bureau; Wells Fargo

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How Did Commercial Real Estate Perform in 2Q 2021?

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Strong Demand Drivers Deliver Impressive 2Q CRE Performance

Underlying Demand Drivers Bolster CRE Performance

  • Economic growth and job recovery unlocking pent-up household formation and consumer spending
  • National housing shortage and aging Millennial population likely to maintain rental market momentum
  • Retail spending rising; holiday season expected to further boost spending and demand for warehouse space

Commercial Real Estate Already Reaping Benefits in 2Q

  • In 2Q, Apartment sector saw record unit leasing activity and its greatest quarterly rent growth since 1999
  • Industrial vacancy fell to 5.0% despite adding 60M sq.ft.; outlook remains strong as eCommerce drives sector
  • Subdued construction and conversion of some vacant space helped Retail vacancy fall for first time in 3 years

Recovery Underway, But Potential Headwinds Linger

  • Office absorption was positive for first time since 1Q 2021, but vacancy rate still in line with Financial Crisis peak
  • Outlook highly dependent on return to office; rising COVID cases could further delay timeline to return

*As of 2Q 2021
Sources: Marcus & Millichap Research Services, RealPage, Inc., CoStar Group, Inc.

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