CBRE: 2022 U.S. Real Estate Outlook Forecasts Record Year for Investment

commercial real estate investment

DALLAS—CBRE foresees a record year for investment in commercial real estate in 2022 due to added momentum in the economic and real estate recoveries, major fiscal stimulus projects, and a rebound of big cities and downtowns, according to the company’s 2022 U.S. Real Estate Outlook.

CBRE anticipates a 4.6 percent gain in U.S. gross domestic product next year as businesses and real estate hit full stride in their recovery from COVID-19 and related restrictions. Investment volumes are expected to increase by 5 percent to 10 percent for the year as low-interest rates and a revival of international travel stoke demand. And downtowns will bounce back as international travel and society’s gradual return to the office bolster offices, stores, restaurants, and apartments.

“Our outlook for U.S. commercial real estate next year is positive due to a number of tailwinds overriding deterrents such as inflation,” said Richard Barkham, CBRE’s global chief economist and head of Americas research. “COVID-19 flareups still pose a risk, but governments and health authorities appear to have made progress in containment and treatment. We see this rising tide further buoying the capital markets, multifamily, and industrial and logistics sector and aiding the burgeoning recoveries of the retail and office sectors.”

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CBRE anticipates that federal policy measures such as spending on infrastructure and social programs will add momentum to economic growth. Meanwhile, inflation will moderate through 2022 so that it amounts to 2.2 percent across the full year. CBRE foresees the Federal Reserve starting to raise the Federal Funds Rate by the end of 2022.

CBRE’s report details the company’s 2022 U.S. Real Estate Outlook in multiple sectors.

Capital Markets

CBRE sees investment volumes increasing by 5 percent to 10 percent from last year to record levels. Industrial and logistics and multifamily remain popular, but investment in office and retail will pick up for the right assets in the right markets. Capitalization rates will hold steady as strong demand for assets offsets eventual interest-rate increases.

Office and Occupier

The office market will remain favorable for occupiers due to elevated vacancy rates, among other factors. The gradual recovery of office demand and leasing activity will carry over into 2022, although the timing of the large-scale return to the office may be affected by the Omicron variant. Employers will favor buildings with numerous amenities and collaboration space to appeal to employees. The life-sciences sector has emerged as a growth leader, with both lab rents and the construction pipeline at record highs.

Retail

CBRE anticipates 10-year highs for leasing and investment activity in U.S. retail real estate next year. Retailers stand to benefit from pent-up demand fueled by personal savings built up during the pandemic. Investors will favor grocery-anchored centers, neighborhood centers, open-air centers, and single-tenant, drive-through buildings.

Industrial and Logistics

This sector will notch another banner year in 2022, propelled by e-commerce growth and retailers storing more inventory as a hedge against supply chain disruptions. High transportation costs stand to ease as congestion at U.S. ports and other supply chain links slowly resolves throughout 2022. Third-party logistics firms will benefit from increased outsourcing of logistics functions.

Multifamily

CBRE sees U.S. multifamily occupancy remaining above 95 percent and net effective rents growing by 7 percent in 2022. Construction completions will hit a new high of more than 300,000 units, reining in performance of high-quality complexes. Occupancy in urban apartments continues to recover as the pandemic recedes.

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