Deconstructing CRE



U.S. Macro Forecast Summary, Q3 2018

Our U.S. Macro Outlook paper will be released next week; in the meantime, see our summary.


Q3 2018 Flash Reports

U.S. Industrial, Retail, Office and Apartment are available on the dashboard.


Deconstructing CRE

  • October jobs report: Strong report; higher wages are here

    Nov 4, 2018, 20:30 PM by Richard Barkham
    The U.S. economy added 250,000 jobs in October—well above the consensus estimate of 200,000. Unemployment remained unchanged at 3.7%—the lowest since 1969—while labor force participation increased by 20 basis points (bps) to 62.9%. Average hourly earnings rose by 5 cents in October and are up by 3.1% over the year. Despite recent stock market volatility and potential employment impacts from Hurricane Florence, the October jobs report showed solid gains across all sectors of the economy, and wage growth for the year is at post-financial crisis highs. The 10-year Treasury yield is up nearly 60 basis points (bps) for the year. The 10-year breakeven inflation rate—a measure of markets’ expectations for inflation 10 years from now—has remained consistently above 2%, the Federal Reserve’s stated goal for inflation...
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  • Can landlords really pass higher property taxes on to tenants?

    Nov 2, 2018, 12:45 PM by Bill Wheaton
    A standard commercial lease will incorporate a share of the building’s property tax costs into the rent. In this way, landlords can automatically pass tax increases on to tenants through rent increases. But do landlords always have the market power to do this—to keep the tax “incidence,” or burden, on the tenant?...
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  • Strongest Q3 GDP Growth Since 2014

    Oct 26, 2018, 12:08 PM by Richard Barkham
    U.S. Gross Domestic Product grew at a better-than-expected annualized rate of 3.5% in Q3, slowing from Q2's 4.2%. The Q3 result is strong, but the deceleration from Q2 reflects a downturn in exports and nonresidential fixed investment. Growth was driven by a strong 4% gain in consumer spending—which comprises more than two-thirds of GDP—and an increase in government spending. Economic growth remains on track for its strongest performance since the global financial crisis...
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  • September jobs report: Hiring and wages cool; unemployment at 49-year low

    Oct 5, 2018, 15:36 PM by Richard Barkham
    The U.S. economy added 134,000 jobs in September—far fewer than the 185,000 expected. This was the slowest growth in a year. Unemployment declined to 3.7% while labor force participation was unchanged at 62.7%. Revisions raised the new jobs tally for July and August by 87,000. Average hourly earnings were up 2.8% year-over-year, slowing slightly from August.

    Although Hurricane Florence (unsurprisingly) dampened September hiring, hiring activity will likely slow somewhat from its relatively strong run in H1 2018. The Fed's hiking the 10-year this week was largely due to strong hiring activity in the private sector...
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Featured Articles

  • U.S. Macro Outlook and Forecast Scenarios, Q2 2018

    Aug 21, 2018, 14:04 PM by Nikhil Mohan
    For U.S. GDP, Q2 2018 saw the strongest growth since Q3 2014, due to the lagged effects of 2017's buoyant global economy, the tax cuts and the stimulus still being provided by the only-moderately-higher interest rates. Although the ongoing trade tensions could potentially dampen hiring activity in the coming quarters, the past few months’ weaker-than-expected hiring has little to do with trade uncertainty and more to do with a shortage of workers. The tariffs imposed thus far are modest and have a relatively low impact on total U.S. trade. Provided that a full-blown trade war does not occur, the potential impact for commercial real estate is little.

    Our forecasts remain largely unchanged from last quarter. While growth in the first half of 2018 was particularly strong, growth in the second half will likely moderate as financial conditions become tighter and the one-time effects of the export surge during Q2 likely begin to fade.

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  • 2018 U.S. Market Outlook

    Dec 15, 2017, 11:10 AM by CBRE Americas Research
    CBRE’s 2018 U.S. Market Outlook forecasts performance trends for the coming year for all major commercial real estate sectors. Beyond the fundamentals of supply and demand, we explore certain macro factors that are likely to impact the industry: tax reform, infrastructure spending, immigration policy, health care policy, business spending and investment, among others. Our baseline scenario anticipates continued economic growth and rising employment in 2018, which should benefit all major asset classes.
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