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.
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.
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.
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.
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.