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What the Ongoing Economic Recovery Means for Real Estate Investors

June 21, 2021 by Marcus & Millichap Research Services

Economic Recovery Underway – Some Headwinds Persist

  • May retail sales are slightly down from April, but 18% above pre-pandemic levels; Core retail sales up 16%
  • As more states reopen, signs point to a summer boost
  • Labor shortages forcing restaurants, Hotels and Retailers to operate understaffed; driving wage & inflation pressure

Current Market Conditions Bolstering CRE Investor Demand

  • Real estate’s rents and value tend to keep pace with rising costs, making it a good hedge against inflation
  • High liquidity and low interest rates further fuel investor demand, particularly for Apt, Industrial and Self-Storage
  • This lifts prices and puts downward pressure on cap rates

Sellers Can Ride Major Tailwinds, For Now

  • Investors who sell will benefit from the wave of buyers and capital flooding into the sector
  • Prime opportunity to take chips off the table, do a sale-lease back, or reposition to new market or property type
  • However, the eventual market recalibration and potential rise in interest rates could limit this window of opportunity

*Core retail sales exclude auto and gasoline sales
Sources: Marcus & Millichap Research Services, U.S. Census Bureau

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Filed Under: Research Brief

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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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