Key Points: Despite a projected increase in retail store closures in 2025, the impact on retail rents is expected to be minimal due to a shortage of retail space and high demand. Retail landlords may benefit from vacancies, potentially replacing less financially stable tenants with stronger ones who can pay higher rents. Most cities with ...
Read More ›Will Wave of Store Closures Flood the Market with Retail Space?
CRE X-Factor: Short-Lived Consumer Spending Spree Masks Underlying Weakness for Retail Sector
Key Points: Recent growth in real retail sales has been driven primarily by durable goods, though much of that spending has already slowed, indicating the consumer spending spree may be the result of consumers pulling purchases forward due to concerns about price trends. Additionally, much of this spending has been financed by rising consumer ...
Read More ›What’s Behind the Increase in CRE Property Insurance Premiums?
Key Points: Commercial property insurance premiums have significantly increased over the past five years, driven by factors such as increased weather-related damages, rising replacement costs, and reinsurance availability. The increase in insurance premiums varies by location, with properties in disaster-prone areas experiencing the highest ...
Read More ›CRE X-Factor: The Next CRE Cycle Arrives: Challenges and Opportunities Await
Commercial real estate (CRE) is inherently cyclical, experiencing phases of expansion and contraction. For instance, the COVID-19 pandemic prompted a shift from urban centers as people sought more space, driving a surge in housing demand. Coupled with exceptionally low post-pandemic construction financing costs, this led to a rapid increase in ...
Read More ›Why DeepSeek May Signal Greater Data Center Demand, Not Less
Key Points: Technological advancements like DeepSeek may paradoxically increase overall data center demand despite improved efficiency. Constraints on data center supply include significant requirements for electricity and water, as well as specialized expertise for construction and operation. The strong, long-term demand drivers for data centers ...
Read More ›CRE X-Factor: Los Angeles May Have Lost Two Years Worth of New Housing Supply to Recent Wildfires
Key Points: Approximately 1.1-1.6 percent of Los Angeles' housing stock may have already been demolished by the wildfires The wildfires have rapidly reduced the housing supply, destroying an estimated 17,000 to 24,000 housing units Rebuilding in Los Angeles will be challenging due to the city's difficult building environment and zoning ...
Read More ›Multifamily Cap Rates Are Poised to Decline in 2025
Key Points: Multifamily cap rates appear poised to decline for the first time in nearly two years. Using First American’s Multifamily Potential Cap Rate Model, we forecast that multifamily cap rates are likely to gradually decline throughout 2025. The return of declining cap rates would be a sign that buyers are becoming more comfortable with ...
Read More ›Commercial Real Estate Multifamily Market Potential Cap Rate Model Multifamily
CRE X-Factor: What Will the CRE Recovery Look Like in 2025?
Key Points: The recovery will not just be an interest rate story, but also a price story. As property prices stem declines and stabilize, transaction activity will gradually follow. In the refinance markets, this rebound appears to already be occurring. Distress in debt markets will take longer to work out and will likely last beyond 2025. The ...
Read More ›CRE X-Factor: How Big of a Lift Will Black Friday Bring to Retail CRE?
Key Points: Retail spending is the life blood of retail commercial real estate and it is slowing in real, inflation-adjusted terms. When compared to pre-pandemic levels, retail rents have not fallen in any of the largest cities and have increased the most in locations with larger population growth. Despite some consumer headwinds, there is very ...
Read More ›Assumable Debt Poised to Boost Nascent CRE Recovery
Key Points: Assumable debt accompanies a property at sale and can be one way to complete a transaction when other forms of credit are scarce or costly. Assumable is typically more attractive when outstanding interest rates on mortgages are lower than prevailing rates for new loans. Though assumable debt use is currently lower than in the years ...
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