CBRE EA BLOG Deconstructing CRE


  • A somber reminder

    Aug 9, 2017, 14:16 PM by Tim Savage
    It's been 10 years since the GFC began. Two economists review the somber history since then.
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  • July jobs report beats expectations

    Aug 4, 2017, 13:24 PM by Jeff Havsy
    U.S. employers added 209,000 jobs in July, which was above the consensus forecast of 180,000 jobs. Over the past three months, job gains have averaged 195,000. This is a healthy pace and the economy remains in good shape, but job growth may be slowing slightly: 2017 has averaged 184,000 new jobs monthly, down from 2016's 187,000. Surprisingly, wage growth has not accelerated, despite the tight labor market. July's 2.5% wage growth maintained the pace we've seen for most of the past year.
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  • GDP growth accelerates in Q2

    Jul 28, 2017, 12:47 PM by Jeff Havsy
    Gross Domestic Product (GDP) for Q2 2017 grew by 2.6% at an annualized rate, in line with consensus expectations. This was the best quarter since Q3 2016 when growth was 2.8%. By comparison, growth in the second quarter last year was 2.2% and in Q2 2015 was 2.7%.
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  • A Tale of Four Markets: The causes of changing rent growth

    Jul 27, 2017, 09:50 AM by Maximilian Saia
    With Q2 2017 data finally in, we can take a fresh look at how rent dynamics have changed so far in 2017, and note some patterns in our forecasts.
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  • Has real estate been a good hedge against inflation? Will it be in the future?

    Jul 21, 2017, 13:06 PM by Bill Wheaton
    Real estate cap rates' decline alongside government interest rates over the past 30 years has buoyed returns, with property values at pace with inflation but property net income falling behind. If cap rates begin to rise, appreciation could vanish.
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  • Last-Mile Logistics

    Jul 13, 2017, 14:15 PM by Tim Savage
    A clean but powerful visualization exploring the geography of last-mile logistics.
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  • June jobs report beats expectations

    Jul 7, 2017, 14:28 PM by Jeff Havsy
    U.S. employers added 222,000 jobs in June, which was above the consensus forecast of 170,000 jobs. Monthly job gains have averaged 194,000 over the past three months. The current unemployment rate is low, but there is no clear trend in overall job generation. Certain sectors, such as health care, continue to see growth. Other sectors, such as construction, manufacturing and transportation, remain flat.
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  • How much do transit access, proximity to downtown, and retail density influence multifamily rents?

    Jul 7, 2017, 14:15 PM by Matthew Vance
    Observing that apartment assets near light rail stations achieve higher rents and revenue than others, we looked into whether that proximity confers the advantage, and whether other factors play a part.
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  • Supply is (still) coming. Where it’s concentrated matters.

    Jun 23, 2017, 14:47 PM by Maximilian Saia
    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?
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  • Why is U.S. food consumption resisting the internet?

    Jun 21, 2017, 15:02 PM by Bill Wheaton
    Online ordering of groceries is thriving and growing across the EU, but if “clicks” are to ever penetrate “bricks” in U.S. food consumption, a hybrid model may be necessary.
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  • June rate rise: Another 25-bps increase by the Fed

    Jun 14, 2017, 16:28 PM by Nikhil Mohan
    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.
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  • Just how high might long-term interest rates actually go?

    Jun 7, 2017, 13:49 PM by Bill Wheaton
    Some thoughts on the factors that historically have governed the relationship between short- and long-term interest rates—and a new one.
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  • Globally, corporate real estate is “future-proofing” to manage risk

    Jun 6, 2017, 10:59 AM by Julie Whelan
    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.
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  • Three years after legalization: Marijuana real estate in Denver

    Jun 5, 2017, 13:34 PM by Matthew Vance
    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.
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  • A disappointing May jobs report

    Jun 2, 2017, 14:16 PM by Jeff Havsy
    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%.
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  • Welcoming EA's new Chairman, Dr. Richard Barkham

    Jun 1, 2017, 12:57 PM by Jeff Havsy
    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.
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  • Apartments: Are development trends hurting the new and the high-end?

    May 24, 2017, 23:46 PM by Matthew Vance
    In many markets with mature development pipelines, newer assets' effective rent growth is decelerating significantly.
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  • The Fed goes open-source

    May 9, 2017, 08:34 AM by Tim Savage
    DSGE, using Julia.
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  • April jobs growth beats forecast

    May 5, 2017, 13:36 PM by Jeff Havsy
    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.
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  • A familiar slow start for GDP growth

    Apr 28, 2017, 15:46 PM by Jeff Havsy
    Q1 GDP growth was the slowest in three years. How concerned should we be?
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  • Some interesting CRE stats for Q1 2017

    Apr 26, 2017, 14:54 PM by Jeff Havsy
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  • Millennials aren't the only ones dragging down homeownership

    Apr 17, 2017, 14:23 PM by Nikhil Mohan
    CBRE EA is engaged in exploring the implications of a turn in home purchase attitudes among millennials.
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  • New supply gives the office market its first vacancy increase in seven years

    Apr 13, 2017, 10:57 AM by Alex Krasikov
    Completions were up by 7% in Q1 2017, dramatically breaking from a four-year trend.
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  • A classification of macroeconomics tools

    Apr 12, 2017, 09:47 AM by Tim Savage
    Olivier Blanchard, Professor Emeritus of MIT's economics department, makes a very important point: different tasks require different types of tools.
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  • Autonomous driving: What it means for CRE

    Apr 11, 2017, 10:59 AM by Bill Wheaton
    It's on suburban highways and roads that the promised benefits of automated driving have the greatest potential.
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  • March jobs report: Back to reality

    Apr 7, 2017, 13:16 PM by Jeff Havsy
    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...
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  • A more accurate historical measure of real estate stock

    Apr 6, 2017, 10:06 AM by Jing Ren
    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...
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  • Fed Watch: Indecision by committee

    Mar 31, 2017, 12:18 PM by James Bohnaker
    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.
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  • Economic uncertainty a growing concern for corporate real estate in the Americas

    Mar 29, 2017, 13:41 PM by Julie Whelan
    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.
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  • "Curve Benders," a presentation by Spencer Levy, Head of Research, Americas

    Mar 23, 2017, 15:07 PM by Tim Savage
    Spencer Levy recently presented at the CBRE 2017 Investor Symposium. Here is a link to a recording of his presentation.
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  • February retail sales disappoint; economic and immigration policy are risks

    Mar 16, 2017, 11:42 AM by Jing Ren
    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.
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  • What it means for real estate: The solar-EV revolution

    Mar 16, 2017, 07:40 AM by Bill Wheaton
    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.
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  • March rate rise: Fed looks to get ahead of inflation

    Mar 15, 2017, 15:05 PM by James Bohnaker
    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.
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  • Big data and CRE

    Mar 14, 2017, 12:08 PM by Tim Savage
    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.
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  • Employment Situation: Feb 2017

    Mar 10, 2017, 14:36 PM by Jeff Havsy
    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.
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  • Higher interest rates a risk for CRE values, recession or not

    Mar 8, 2017, 11:51 AM by Serguei Chervachidze
    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?
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  • How does the economic cycle influence the length of office leases?

    Feb 27, 2017, 16:18 PM by Alex Krasikov
    With some recent interest in whether the economic cycle affects the length of office leases, we decided to look at quarterly U.S. office-leasing data for the past 35 years...
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  • It's not a recession you should be thinking about... It's three recessions

    Feb 16, 2017, 22:08 PM by Jing Ren
    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.
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  • Apartment rents: Unpacking the statistics

    Feb 9, 2017, 08:22 AM by Matthew Vance
    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%?
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  • Employment Situation: January 2017

    Feb 3, 2017, 12:10 PM by Jeff Havsy
    Our outlook is unchanged after a good, but not great, report to kick off 2017.
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  • Forecaster Beware: Don’t jump the gun on Trump stimulus

    Feb 1, 2017, 15:22 PM by James Bohnaker
    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...
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  • Fed Watch: Going with the flow

    Feb 1, 2017, 13:53 PM by James Bohnaker
    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.
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  • Interest rates and cap rates: A tale of two scenarios

    Jan 31, 2017, 14:47 PM by Serguei Chervachidze
    How will rising U.S. interest rates affect cap rates? It depends.
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  • Q4 2016 GDP

    Jan 27, 2017, 12:59 PM by Jeff Havsy
    Our views on the Q4 2016 GDP announcement. Steady as she goes.
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  • Live-Work-Play: A better way to classify location

    Jan 26, 2017, 12:36 PM by James Bohnaker
    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.
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  • Unpacking recent U.S. population growth

    Jan 24, 2017, 09:46 AM by James Bohnaker
    What were the trends in U.S. population growth and migration in 2016 and why do they matter to CRE?
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  • What do advances in automation promise for office demand?

    Jan 19, 2017, 08:34 AM by Tim Savage
    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.
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  • How resilient are U.S. office markets to a recession?

    Jan 18, 2017, 09:24 AM by Serguei Chervachidze
    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.
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  • What trade barriers might mean for U.S. warehouse demand

    Jan 12, 2017, 10:04 AM by Bill Wheaton
    Changes proposed by the coming administration could have a substantial effect on warehouse demand trends. Recently at EA we crunched the numbers and came up with some results...
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  • We've already had this debate

    Jan 10, 2017, 10:04 AM by Tim Savage
    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.
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  • Employment Situation, December 2016

    Jan 6, 2017, 13:54 PM by Jeff Havsy
    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.
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  • Welcome!

    Dec 29, 2016, 16:03 PM by Jeff Havsy
    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.
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  • Retailers thankful for a confident U.S. consumer

    Dec 26, 2016, 14:37 PM by James Bohnaker
    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%).
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  • Employment Situation, November 2016

    Dec 2, 2016, 11:32 AM by Jeff Havsy
    November's unemployment report was solid, but not spectacular. The economy added 178,000 jobs and the unemployment rate dropped to 4.6%, a nine-year low.
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