It has been a long journey since 2020. Where everything including the Real Estate market seemed full of risk and uncertainty. Since then it seems the market is making up for the lost time. Below are the asset classes and what opportunities and risks hold for their future.
E-Commerce has infiltrated everyone’s life since the pandemic began in 2020. This trend is growing exponentially. As the importance of e-commerce increases every day, so does the quality of the vehicle that produces it, which are the industrial properties. The market has seen a record decline in vacancies throughout the U.S to 3.2%. The demand for this asset type is much greater than the available supply. The trend of record demand versus supply will continue and cause both sale and lease prices to increase. Here’s the bottom line. Cap rates are compressed and have been driving industrial asset prices higher.
The Multifamily market has been trading at record-breaking volume and prices, and the only question is “how much longer?” Multifamily assets are expected to grow by 7% in 2022 after an already record-breaking 2021. 300,000+ Multifamily units are expected to be delivered in 2022 which is way above the average of 206,000 annually since 2010. Investment will increase 10% in 2022 to over $234 billion. Investors are buying with the prospects of a “value-added” play. This is the most competitive and lucrative cycle the Multifamily asset class has ever seen. Selling or value-added acquisition are the game investors want to be in.
Retail values have rapidly recovered from pre-pandemic levels. Overall foot traffic in retail stores and centers have recovered and soared beyond the pre-pandemic level. The factors that have contributed to this are an overall retail economic recovery, along with stimulus injection from the government into the economy. These factors have caused consumer spending to skyrocket. In 2020 sales per square foot was $126, and in December 2021 that number grew to $144/ SF. This year consumer spending forecasts are expected to grow to record levels. Retailers have renewed confidence and are signing longer leases, which brings increased value to retail assets. There has never been a better time to own, lease, or sell retail assets as increased analytics and compressed CAPs are driving values higher.