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Commercial property

One Year Into COVID: The Light at the End of the Tunnel is Getting Brighter

March 16, 2021 by Marcus & Millichap Research Services

Numbers of March 10, 2021
Trailing 7-day average for daily Coronavirus cases

As we pass the one-year mark of the pandemic, the light at the end of the tunnel is getting brighter. The recently passed $1.9T stimulus combined with the ongoing vaccine rollout is boosting the 2021 outlook.

  • The hard-hit Hotel & Retail sectors will benefit as reduced restrictions encourage travel and shopping.
  • Apartment demand may strengthen as household formation re-invigorates amid rising job growth.
  • Strong momentum will likely continue for Industrial, though rising supply does pose some risk.
  • Vaccinated workers may accelerate the return to the Office, though the future of working remains unclear.

Economic Forecasts for 2021 Increasingly Optimistic

  • The recently passed third round of stimulus and the rising rate of vaccinations have bolstered the 2021 outlook
  • Economists are forecasting 2021 GDP growth from 5% up to 8.1%, which would be the highest growth since 1950
  • The pace of job recovery is expected to accelerate as vaccinations allow more states to loosen restrictions

Economic Recovery Will Bolster Hardest Hit Property Types

  • Vaccinations could encourage summer travel, raising Hotel occupancies and restoring some hospitality jobs
  • Reduced restrictions could help stabilize Retail, which had negative absorption of 26M sq. ft. last year

Stronger Outlook Provides New Tailwinds for CRE

  • Apartments could get a demand boost later in the year as job creation invigorates new household formation
  • Industrial is expected to maintain its strong momentum, but risk of elevated supply remains
  • While vaccinated workers can return to the Office; uncertainty remains on how quick that recovery will be

Sources: Marcus & Millichap Research Services, The New York Times, Bloomberg L.P.

Filed Under: Special Report Tagged With: Commercial property, commercial real estate, CRE, cvs deals, dollar general deals, economy, essential retailer, nnn, nnn deals, walgreens deals

Is 2021 Poised to Bring a Major Revival for Commercial Real Estate?

January 22, 2021 by Marcus & Millichap Research Services

Is 2021 Poised to Bring a Major Revival for Commercial Real Estate?

By Marcus & Millichap Research Services

  • Prospects for new stimulus and renewed virus containment efforts strengthen the 2021 economic outlook
  • Additional stimulus checks and extended/expanded unemployment benefits will support spending activity
  • Furthermore, if the vaccine rollout continues as expected, trillions in savings could be unleashed
  • Nearly all types of real estate stand to benefit as spending activity and job growth accelerate
  • Retail and Hospitality in particular could see a revival as consumers re-engage with the marketplace
  • Employment growth supports the Apartment and Office sectors and indirectly supports Industrial demand
  • As a result, the outlook for commercial real estate in 2021 and beyond is looking brighter

Filed Under: Special Report Tagged With: 1031 exchange, Commercial property, commercial real estate, CRE, industrial property, investment property, net leased, nnn, research, retail property, STNL, triplenet

What’s Driving Interest Rates Higher?

January 15, 2021 by Marcus & Millichap Research Services

By Marcus & Millichap’s Research Services

Economic Outlook Placing Pressure on Interest Rates

  • The Georgia Senatorial run-off results reduced political uncertainty and raised the chance of additional stimulus
  • This has strengthened the 2021 economic outlook
  • As a result, the 10-Year Treasury is back up to 1.1% from 0.5% back in August, but still far from 1.8% a year ago

Rising Rates Already Impacting Commercial Real Estate

  • Apartment loans have seen rates rise 30-40 basis points over the last few weeks to the upper 2% to mid-3% range
  • Quality Office & Industrial rates run in the low 3% range; Retail Centers & Self-Storage can fall in mid-to-upper 3%
  • Hotels financing remains challenging, but available

Upward Momentum Likely to Continue

  • Advancements in the economic and health care fronts are signals that interest are likely to continue rising
  • Diminishing uncertainty is also taking more investors off the sidelines, increasing competition in the market
  • For inventors who plan to buy this year, locking in these favorable rates may prove beneficial in the long-ter
* Average cap rate through December 2020; 10-year treasury through January 13, 2021
Includes apartment, retail, office, and industrial sales $1 million and greater
Sources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics, Federal Reserve

 

Filed Under: Special Report Tagged With: 1031 exchange, apartment loans, Commercial property, commercial real estate, deals, economic research, finance, financing, hotels, industrial, interest rates, office, rates, research, Retail, retail centerrs, self storage, shopping centers

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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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