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Archives for October 2021

Why is Commercial Real Estate Outperforming?

October 25, 2021 by Marcus & Millichap Research Services

Global Pandemic Has Created Various Headwinds

  • Inflationary pressure and supply-chain disruptions will weigh on economic growth, but recession risk low
  • Labor shortage driving wage inflation and limiting recovery – Retail and Hotels particularly impacted
  • Return to Office remains a big unknown

Despite Disruptions, CRE Maintains Strong Performance

  • Apartment and Self-Storage vacancies sit at record-lows while rents are soaring
  • Industrial vacancies falling and rents on the rise despite elevated construction levels
  • Seniors Housing, ST-Retail and some Hotel segments on road to recovery; Downtown Hotels, indoor malls lagging

Long-Term Outlook Remains Favorable

  • U.S. household savings and wealth up significantly from pre-pandemic – Fuels spending and economic growth
  • Supply-chain disruptions limit new construction and benefit existing commercial real estate
  • Underlying demand drivers to support CRE in long-term

As of 2Q 2021
Sources: Marcus & Millichap Research Services, RealPage, Inc., Costar Group, Inc., Yardi Matrix

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Filed Under: Research Brief

Retail Sales Research Report | October 2021

October 20, 2021 by Marcus & Millichap Research Services

September Retail Sales Outperform as Foot Traffic Remains Elevated

  • Consumer spending sturdy last month. Unfazed by the end of federal unemployment benefits and other dissipating stimulus, core retail sales increased 0.7 percent in September and 13.5
    percent from the same period last year.
  • Strong sales support retail properties. Consumer spending supported brick-and-mortar retailers through the worst of the health crisis.
  • Variants have minimal impact on dining out. Receipts at eating and drinking places increased 29.5 percent year over year, the second-highest annual rise after gasoline stations.

Temporary Headwinds Mount

  • Supply chain issues threaten holiday sales. As global trade reopens unevenly, the carefully orchestrated supply lines that existed prior to the pandemic are having trouble returning to
    previous efficiency.
  • Vaccine mandates cloud short-term outlook. Over the past several weeks an assortment of vaccine requirements, ranging from public to private and local to federal, have been enacted across the country.

*Through September
Sources: Marcus & Millichap Research Services; CoStar Group, Inc.; Placer.ai; U.S. Census Bureau

Download the Full Report Here

Filed Under: Research Brief, Retail

Employment Research Brief | October 2021

October 11, 2021 by Marcus & Millichap Research Services

Job Growth Tempers in September; Industrial Sector Continues to Outperform

  • Hiring slows again in September. The complete expiration of federal unemployment insurance did not translate into accelerated job growth last month as the health crisis continued to present
    challenges.
  • Demand for industrial spaces and employees to fill them rises. In contrast to other segments of the economy, the trade, transportation and utilities sector has already surpassed its pre-pandemic
    headcount and continues to grow.
  • Vaccine requirements constrain onboarding. After previous strong growth, hiring at bars and restaurants shifted minimally in September. Despite reopenings, some people continue to be wary
    of dining out, while New York and Los Angeles now require proof of vaccination from patrons, limiting visits.

Developing Trends:

  • Decisions to not work shrink labor force. While the unemployment rate fell to a new pandemic period low of 4.8 percent, part of the decline can be attributed to a contraction in the size of the
    civilian labor pool.
  • Higher wages and other costs impacting company operations. Although hiring slowed last month, shortages in many key positions remain, adding upward pressure to wages.

Sources: Marcus & Millichap Research Services; Bureau of Labor Statistics

Download the Full Report Here

Filed Under: Research Brief, Employment

Which 3 Property Types Had the Strongest Price Growth?

October 4, 2021 by Marcus & Millichap Research Services

The 3 Property Types With The Greatest Price Appreciation

Industrial Properties Maintain Strong Investment Outlook

  • Industrial had 3rd strongest price gain, at 13.6% Y-O-Y; Rents grew 5.9%, vacancy fell 30 bps to 5% in 2Q 2021
  • Thriving eCommerce and current supply chain issues have drawn significant investor interest
  • Investors penciling aggressive rent gains into valuations

Underlying Demographic Trends Bolster Apartment Demand

  • Apartments had 2nd greatest price growth, 14.7% Y-O-Y; Through 2Q, rents grew 4.3% and vacancy fell 90 bps
  • Aging millennial population and limited housing supply to support long-term Apartment demand

Suburban Office Comes Out on Top

  • Suburban Office had strongest price growth at 14.8%; While rents up only 0.6%, vacancy rate up 230 bps Y-O-Y
  • Price gain result of recuperating losses, sale composition with stronger assets and investor speculation
  • Investors betting on workers relocating to the suburbs, pulling employers and businesses with them

 

As of August 2021
Includes sales $2.5 million and greater
Sources: Marcus & Millichap Research Services, Real Capital Analytics

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Filed Under: Research Brief

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This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as to the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any inaccuracies. Any projections, opinions, assumptions or estimates used herein are for example purposes only and do not represent the current or future performance of the property. Marcus & Millichap Real Estate Investment Services is a service mark of Marcus & Millichap Real Estate Investment Services, Inc. © 2020 Marcus & Millichap and Limon Net Lease Group

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