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Investor Sentiment Survey

2H 2022 – Investor Sentiment Survey Results

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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

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CRE Investments – The Insider’s Perspective

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Investor Perspectives on the Value of Commercial Real Estate

Investors See Opportunities in Pandemic-Impacted Sectors

  • Despite uncertainty around return-to-office, Office absorption has been positive & rising for 3 quarters
  • Investors expect 2.4% Y-O-Y Office price appreciation
  • Loosening COVID mandates & strong growth trajectory has investors projecting 3.7% rise in Retail values

Underlying Trends Will Continue to Drive CRE Appreciation

  • Housing shortage has 43% of Apartment investors saying it’s a good time to buy; Anticipate 8.6% price climb
  • While 40% of all investors think it’s time to buy Industrial, 58% of owners think the same; Expect 7.4% value rise
  • Supply shortages to sustain warehouse demand

Insiders’ Insights Provide Unique CRE Opportunities

  • Certain Hotel types performing near pre-COVID levels, creates expectation of 7.3% value gain over the next year
  • Record-low vacancies & subdued construction pipeline has Self-Storage investors forecasting 6.4% value gain
  • Consolidation trends and strong demographics create expectation of 9% value gain for Seniors Housing

*As of 1H 2022
Base: All respondents; bases vary by property type currently invested in.
Sources: Marcus & Millichap Research Services, M&M/WMRE Investor Survey

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Investor Sentiment Survey Results | 2021 Second Half

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New Investor Sentiment Survey Results for 2H 2021:

Strong Sentiment Points to Positive CRE Outlook

  • Investor sentiment remained stable at 165, in-line with pre-pandemic levels; above 140 from this time last year
  • About 74% of respondents say their properties are performing at or better than pre-COVID levels
  • Half of respondents plan to increase their CRE holdings as values are expect to rise for all property types

Economic Recovery Expected to Drive CRE Appreciation

  • Seniors Housing expected to see largest YOY gain at 7.5% due to a post-pandemic occupancy recovery
  • Industrial benefited from rise in eCommerce and “Just In Case” inventory; investors anticipate 7.4% price growth
  • Apartments, Self-storage, and Hotels also expect strong gains; driven by rent growth and economic recovery

Potential Headwinds Could Reshape CRE Landscape

  • Changes to tax law, rising interest rates and elimination of 1031 Exchanges remain top investor concerns
  • Despite elevated uncertainty, investor sentiment remains higher than 4 out of the last 5 years

As of 2H 2021
Base: All respondents; bases vary by property type currently invested in.
Sources: Marcus & Millichap Research Services, M&M/WMRE Investor Survey

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