On the strength of the current and future apartment construction pipeline, headlines and commentary are all over the place: It's common to see "boom," "explosion" and "surge" characterizing the current environment, even as reports assert that not enough housing is being built and that much more multifamily housing will be needed to keep up with demand. Which narrative is correct?
Since the Fed resumed its (so far, incremental) increases in December, long-term rates have remained stable, keeping cap rate increases limited. CRE fundamentals remain strong, so improved economic growth should lead to an extended cycle.
CBRE recently released the fourth installment in its reporting on corporate real estate (CRE) executives’ priorities, strategies and outlook. Conscious of the risk that continuing change in the economy, labor markets and technology and poses, CRE decision-makers are “future proofing” by improving user experiences and prioritizing agility in their space use.
With a number of states and localities having legalized (or taken steps toward legalizing) recreational marijuana in the past few years, some are looking to Denver to gauge how the industry might affect their local industrial fundamentals. In a new report, we offer a roadmap to identifying opportunity in the market, based on observations of industry dynamics in Denver.
U.S. employers added 138,000 jobs in May—well below the consensus forecast of 185,000 jobs. March and April figures were revised downward by 66,000. The unemployment rate fell to 4.3%—its lowest level since 2001—but the labor force participation rate dropped to 62.7%.
We are pleased to welcome Dr. Richard Barkham, CBRE’s Global Chief Economist, to Boston as he takes on an additional role as EA’s new Chairman. From his London office and in his travels throughout the world, Richard has been frequently immersed in the global trends that are transforming the dynamics of local real estate markets. Richard’s perspective and presence will serve EA and its clients well, as we continue to build our platform and to integrate EA’s data science expertise with the global work of CBRE Research.
After a lull in March, employment growth rebounded in April. The rolling three-month average was virtually unchanged at 174,000 jobs per month and the average for the past 12 months is 186,000—so employers have not materially changed their hiring patterns. Notwithstanding the change in business and consumer sentiment since Donald Trump’s election, economic data in 2017 remain very similar to those at the end of the Obama administration.
U.S. employers added 98,000 jobs in March—well short of the consensus expectation for 180,000. Seasonal weather factors are partially to blame: Mild winter weather in January and February boosted job growth well above 200,000, and late-season snowstorms contributed to the poor number in March. All told, it was a solid first quarter...
In maintaining a historical time series of real estate stock, the industry standard approach is to calculate past quarters' stock levels by subtracting buildings from the current level according to their ages. This method doesn't account for buildings that were demolished, however, so the standard measure of historical stock is, by definition, an underestimation. To see if we can address this, we are developing a “gross” stock series that adds back...
Most FOMC members agree that rates will need to head higher in the next few years, but how quickly is a source of great debate. Don't be surprised to see even greater indecision as uncertainty rises later in the cycle.
CBRE's recent survey shows economic uncertainty looming larger among CRE executives' concerns, second only to talent management. Half ranked economic uncertainty a top-three concern, up from last year's one third.
With weakness in most segments, February retail sales disappointed. Delayed tax refunds and immigration policy may have contributed to the weak retail sales—the latter a particular source of concern for retailers in markets with large immigrant populations. Policy on immigration and the economy may represent the greatest risk to retail markets over the coming quarters.
The prospect for suburban living has just gotten a lot brighter. Suburban houses will not only be able to generate the energy they need internally, but also fuel their cars—and all with absolutely no CO2 emissions.
Upward pressure on cap rates is expected, muted by strong capital flows from foreign and domestic institutional investors. CRE fundamentals remain strong overall, and improved business and consumer confidence may lead to enhanced late-cycle tenant demand.
CBRE has a lot of proprietary data sitting in data "puddles." Big data is creating a data "lake" from those puddles by linking data feeds, and then using the power of machine learning to derive insights for our clients. Our just-introduced Live, Work, Play (LWP) Index is an example of a big data exercise in CRE.
February’s jobs report was strong, with excellent headline numbers, good wage growth and rising labor force participation. Nothing in this report should give the Fed pause about raising rates next week.
With the new administration at the reins and macroeconomic indicators sending mixed signals, investors are wondering what the future promises for the direction of the U.S. economy commercial real estate. This seems to be certain in investors’ minds: interest rates are likely to increase—at least in the medium term, if not in the long run. What would such increases imply for CRE, and particularly for CRE values?
Every economic recession has its unique origins, but it can also usually be characterized by the macroeconomic scenario that sparked it. The three scenarios that typically cause recessions have unique impacts on individual markets and property types and are the key to understanding how your portfolio will weather recessions to come.
New York City drives a lot of trends, including our calculation of rent growth for the Sum of Markets. Year-over-year effective rent growth was 0.2% in Q4; though it's meant to represent the national trend, for most of us, that figure doesn’t exactly fit our experience. So, how did we arrive at 0.2%?
An update on EA's U.S. macroeconomic outlook: Even if Trump is able to enact his economic policies as planned, the stimulus will be slugging against a mature economy. Higher interest rates, the strong dollar, and a tight labor market are enough reason to believe that the natural business cycle is on the downslope. Moreover, there is plenty of evidence that fiscal policy is less effective when the economy is at full capacity, so that will work against any stimulus as well...
There's no reason for the Fed to be vocal at this point, and 2017's first FOMC meeting saw no policy changes made. The Fed is keenly aware of the heightened degree of fiscal uncertainty and clearly has not bought into the notion—already accepted by many economic forecasters—that fiscal stimulus will launch the economy into higher gear. EA's baseline outlook remains tempered as well, at least until we see where the new administration is heading.
Location, Location, Location—it’s been the mantra of real estate since the phrase first appeared in a Chicago Tribune property ad in 1926. CBRE Econometric Advisors is currently developing a Live-Work-Play Index that classifies locations based on objective analysis rather than subjective bias.
Automation is suddenly making headlines in business and finance news reporting. In a recent ViewPoint, I address the broad issue of automation permanently displacing certain types of workers, and what implications that might hold for CRE.
Whether it’s a year or eight years away, investors are wondering what the next recession will mean for CRE performance: Will certain markets or asset types be more immune to its negative effects than others? How will markets differ in their speed to recovery?
In a recent study, we examined the effects of a major 2008-type recession on rents and vacancy in the 10 largest U.S. office markets, finding major response differences.
Since the global financial crisis, we have seen numerous studies of fiscal policy, and of the so-called fiscal multiplier, which measures the response of economic variables to a one-time increase in government spending. Since the November election, there has been much talk about such spending—specifically, on infrastructure. Given recent research, however, this infrastructure spending may not be particularly stimulative.
Today's December employment report had a relatively low headline number, but also a lot of positive data behind it. Revisions to October and November jobs numbers showed a net gain of 19,000 jobs, though the three-month rolling average fell to 165,000, a drop of 11,000 from last month.
Welcome to your new CBRE EA web portal, created to improve your experience in accessing CBRE EA’s data warehouse, tools and analysis. It features streamlined navigation, an improved design, and this new blog, Deconstructing CRE, which will be a source of ongoing discussion and thought leadership regarding topics relevant to the CRE community. As the portal will continue to evolve, we look forward to and appreciate your feedback.
Concern about a slowdown in consumer spending can go on the back burner, thanks to recently revised data from the BEA. The latest release shows significantly better Q3 personal consumption growth (2.8%) that was initially estimated (2.1%).