Risk of COVID Continues to Decline, But Impact Still Lingers
- Infections continue to weigh on recovery of Retail, Office, Seniors Housing and Hotels, primarily in urban centers
- However, COVID-fueled behavioral changes boosted Self-Storage and Apartment demand
Labor Shortage Weighs on Economic and CRE Recovery
- Property types with large staffing needs, like Sr. Housing and Hotels, have felt the biggest impact
- MOB, Industrial and Retail face indirect risk if tenants can’t find staff and cut back on space demand
- Labor shortage putting upward pressure on wages, supports higher rents for Apartments and Self-Storage
Inflationary Pressure Is Real and Rising, Likely to Persist
- While Office and Retail often have longer leases, they can include escalator clauses tied to inflation
- Apartment and Self-Storage can adjust rents once or more a year, providing higher inflation resistance
- Hotel’s capability to change rates daily make it the most resilient against inflation
*Through November; CPI through December; 10-Year Treasury through January 26
Sources: Marcus & Millichap Research Services, Federal Reserve, BEA, BLS
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