Three “glass-half-full” forecasts for the new year

Despite the ongoing uncertainty of the new virulent Omicron variant of Covid-19, there are a lot of positive signs that we can expect in 2022 for commercial real estate (CRE), according to a round-up of sources.

The case for optimism
First, however, an important caveat: Of course, all of these predictions are opinion. No matter how great the historical data used to inform those opinions, they are still not to be considered “financial advice”. Having said that, after a difficult two years (for global business, not just real estate), a little optimism is a welcome break.

Survey says…
First up, Deloitte’s annual forecast report for the CRE sector is out, and generally reflects a high degree of buoyancy.

“Eighty percent of respondents [to their survey] expect their institution’s revenues in 2022 to be slightly or significantly better than 2021 levels,” writes the report’s authors.

…And so does the data
Meanwhile, Forbes real estate contributor and economic analyst Calvin Schnure has done a list of predictions for the year ahead, starting with this one: “Property transactions will rise further in 2022 as the economic recovery gains momentum, and CRE prices will maintain growth in the mid-single digits. REIT mergers and acquisitions could top 2021 as well,” writes Schnure.

How does he come to this conclusion? It’s a matter of looking at the bigger (data) picture trends, he says – plotting this graph from RCA, Bloomberg and NAREIT data.

Source: https://www.forbes.com/sites/calvinschnure/2021/12/01/top-10-things-to-watch-in-commercial-real-estate-in-2022/?sh=352375d63002

“All in alert”
Finally, in December 2021, investment and commercial analysis publication The Motley Fool issued a “rare ‘all in’ buy alert” for CRE, offering three key points of their bullish positioning:

• “Industrial and multifamily sectors look the most promising in the new year.”
• “Retail and office CRE should have its good performers but see more headwinds.”
• “REITs remain a promising avenue for overall returns.”

For the nitty-gritty in how they came to this conclusion, read the full analysis by author Marc Rappaport here.

As we said above, a prediction isn’t a guarantee, a forecast isn’t fact, but we think these bold analysts make a great case for optimism and a solid-looking year ahead for commercial property and investing.

From us to you, happy new year to our CRE network and peers!