Is a Bubble Forming in Commercial Real Estate
November 2021
Video Highlights
The big question on many investors’ minds - “Is a bubble forming in CRE?”
From a macro level, Retail, Urban Office, and Suburban Office are not in a bubble. These assets have experienced moderate price growth and fundamentals that keep pace with price gains.
While apartment values have climbed considerably, historically strong vacancy and rent growth support strong appreciation. A persisting housing shortage also proves to be a strong tailwind.
Self-Storage price gains are backed up by record property performance including all-time low vacancies and a sound balance of supply and demand.
While exuberance has been strongest in industrial, a bubble still seems unlikely. Vacancy, rent growth, and NOIs support aggressive price appreciation. Heightened eCommerce and continuing supply chain disruptions provide long-term tailwinds.
Investors should closely monitor the supply and demand outlook for the next 3 to 5 years.