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Archives for September 2022

What the 5th Fed Rate Increase Means for Investors

September 26, 2022 by Marcus & Millichap Research Services

How FED Rate Hike Impacts the Commercial real estate outlook

Takeaways From September Fed Meeting

  • The Fed reiterated its commitment to preserving stable prices and moving inflation back to 2.0%
  • They raised interest rates 75 basis points, projected another 125-basis point rise before the end of 2022
  • Indicated a 4.4% unemployment rate may be needed to balance the labor market and control inflation

Why Rising Rates Matter For Investors

  • Rising capital costs are squeezing levered yields; buyer underwriting becoming increasingly conservative
  • As market recalibrates sellers must review market pricing to align with buyer expectations

How This Impacts Commercial Real Estate Transactions

  • Expectation gap emerging between buyers and sellers
  • Recalibration of the transaction market is needed for buyers and sellers to reach market clearing sales prices

*Through September 22
Includes apartment, retail, office, and industrial sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics, Federal Reserve

Watch the Video Below

 

Filed Under: Research Brief

Return to Office Outlook

September 12, 2022 by Marcus & Millichap Research Services

How the Labor Shortage Shapes Commercial Real Estate Trends

Role of Labor Markets in Return-to-Office Decisions

  • Health concerns were original reason for remote work, but worker preferences are now the biggest hurdle
  • Strong job gains continue to support consumption and CRE space demand
  • The U.S. currently has a substantial labor shortage which drives continued remote work trends

What it Could Take to Resolve the Labor Shortage

  • Overall unemployment rate is 3.7% and just 1.9% for college educated workers
  • Severe shift necessary to re-align employment trends

What this Means for Commercial Real Estate?

  • Remote work benefits suburban CRE space demand
  • Return-to-office would boost urban CRE demand
  • Lingering labor shortage a headwind for service staff dependent CRE like hotels and seniors housing

*Through July, Unemployed through August
Sources: Marcus & Millichap Research Services, BLS

Watch the Video Below

 

Filed Under: Research Brief, Outlook Report

2H 2022 – Investor Sentiment Survey Results

September 6, 2022 by Marcus & Millichap Research Services

New Investor Sentiment Survey Results for 2H 2022

Investor Sentiment Modestly Retracts in Second Half

  • Investor sentiment dipped 11 points in 2H 2022, reminiscent of 2016
  • Interest rates and inflation ranked as top two concerns

Investor Decisions Not Curtailed by Economic Headwinds

  • Rising interest rates only modestly tapering buyer intent
  • Most investors indicated they would not change their investment decisions based on elevated inflation

Investors Divided on Rate Hikes Impact on Cap Rates

  • Half of investors believe cap rates will rise, but half expect them to remain stable or fall
  • Sentiment suggests activity going into 2023 will remain strong by historical standards

*Trailing 12 months through 2Q
Includes Apartment, Retail, Office and Industrial sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics, M&M/WMRE Investor Survey

Watch the Video Below

 

Filed Under: Investor Sentiment Survey

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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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