CRE is Outperforming, But Not All Property Types Are
- Retail prices up only 1.9% from 2019, revenue is up 2.2%; Bargain buy since recovery likely to drive demand
- Suburban Office price +11.5% and revenue +1.1%; Price growth bet on future demand from migration to suburbs
- Return-to-office uncertainty driving down urban prices
Record Price Growth Supported by Elevated Demand
- Apartment price +11.9%, revenues +12.6%, with historically low vacancy; Housing shortage to support high demand
- Self-Storage prices up 15.5%, revenue +17.2%; Pandemic provided demand boost, tapered supply-side risk
- Demographic trends expected to sustain demand
Do Outsized Gains Mean Cause for Concern?
- Supply chain disruptions and eCommerce supporting record Industrial price gains of 22%, with revenues up 11%
- However, record absorption is being met by record construction; Potential oversupply risk in years to come
- While no bubbles are forming in CRE, investors should consider the supply & demand outlook several years out
Pre-recession growth period: 2019 through 3Q 2021
Includes sales $1 million and greater; Includes urban and suburban office sales $2.5 million and greater
Sources: Marcus & Millichap Research Services, Real Capital Analytics, CoStar Group, Inc.