{"id":1004704425,"date":"2024-03-01T04:11:46","date_gmt":"2024-03-01T12:11:46","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004704425"},"modified":"2024-03-06T09:12:28","modified_gmt":"2024-03-06T17:12:28","slug":"opportunities-ahead-in-cbre-investment-managements-cre-outlook","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/opportunities-ahead-in-cbre-investment-managements-cre-outlook\/","title":{"rendered":"CRE Experts See Opportunities Ahead"},"content":{"rendered":"
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Josh Stoffregen-Foye, global head of media relations for CBRE Investment Management moderates a discussion between Richard Barkham, Shane Taylor, Larissa Belova, Mary Lang and Steve Dowd.
Photo by Hudson Pitts, courtesy of CBRE Investment Management<\/em><\/figcaption><\/figure><\/div>\n\n

Experts at CBRE Investment Management<\/strong>\u2019s first annual press luncheon were optimistic about the state of commercial real estate investment and development in 2024 and beyond, even in the face of longstanding secular challenges that numerous asset classes face.<\/p>\n

Economic outlook: Soft landing entirely possible<\/h2>\n

Despite the decades-high interest rates<\/a>, CBRE Global Chief Economist Richard Barkham was bullish about both the economy\u2019s prospects and its impact on asset class fundamentals. Pointing to the more than threefold decline in core inflation, Barkham sees a soft landing as \u201cvery much in the cards.\u201d<\/p>\n

Additionally, government spending and containment of the successive bank failures in March of 2023 helped further stimulate the economy. In the same vein, legislation such as the CHIPS and Inflation Reduction Acts have spurred a great deal of construction activity and investment, and trickled into the \u201cresilience of the consumer,\u201d through the development of projects such as chip fabrication and electric vehicle production plants, Barkham explained.<\/p>\n

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READ ALSO: <\/strong>What\u2019s Boosting CRE Investor Confidence Now: Survey<\/span><\/a><\/p>\n

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But how does all of this affect commercial real estate asset performance in real time? Highlighting five consecutive quarters of positive net absorption in the industrial and retail sectors, Barkham believes that the \u201cdiscourse focuses on office, but for the majority of sectors, the fundamentals are positive.\u201d Speaking of office, Barkham also pointed out the fact that 80 percent of office properties remain income-producing.<\/p>\n

For capital markets, however, the business appears to already be in a recession, going back to the middle of 2022. Total transactions in 2023 fell by 52 percent year-over-year to $81 billion, according to the firm\u2019s internal data<\/a>. Pointing to the roughly $2.2 trillion in refinancing loans that are maturing before 2028, Barkham believes that \u201cthe next 24 months are going to be tricky,\u201d especially as some lenders, such as regional banks, have all but exited the market. The office sector in particular is likely to suffer further as more properties come under distress. \u201cSome capital is available, but some losses are going to be incurred by owners and lenders of office real estate,\u201d Barkham added.<\/p>\n

Still, the interest rate cuts likely to take place later this year should cause capital markets to experience a \u201cslow revival,\u201d according to Barkham.<\/p>\n

Industrial’s vintage year<\/h2>\n

Despite the high costs and oftentimes undesirable available capital, secular, intangible changes impacting numerous commercial asset classes still make them strong investments, even in the current rate environment. For industrial, the construction of technologically advanced logistics space is a must, given escalating geopolitical tensions and environmental risks. \u201cWe not only need more logistics stock, but modern, efficient stock,\u201d capable of meeting the just-in-time delivery needs of American consumers and businesses, explained Shane Taylor, the firm\u2019s Americas head of research.<\/p>\n

Larissa Belova, managing director of U.S. Core Strategies views industrial as a core asset, giving the significantly rising rents, \u201crobust leasing activity\u201d and \u201ctremendous desire to invest\u201d despite \u201cdistress in the capital stack.\u201d \u201cIt\u2019s going to be a great vintage, and we are at the beginning of the next supercycle,\u201d Belova added.<\/p>\n

Innovations and disruptions<\/h2>\n

On the development end, this desire to meet demand is easier said than done. The industrial sector, as Taylor observed, is \u201cpoised for a lot of disruption,\u201d given technological overhauls in infrastructure, robotics and amenities. Moreover, the average age of an industrial property in the U.S. is 40 years, according to Mary Lang, head of Americas direct logistics strategies & portfolio manager.<\/p>\n

With this in mind, \u201cthe greatest amenity going forward is going to be the availability of power,\u201d given the fact that most facilities require 8 amps at a minimum to power material handling systems and robotics<\/a>, to say nothing of electric vehicle chargers. Lang believes that the solution lies in the implementation of solar panels and on-site battery storage, which not only increase energy efficiency and accommodational capabilities but their resiliency as well. For upscaling to 8 amps, \u201cYou can\u2019t just call a utility,\u201d Lang observed.<\/p>\n

Industrial demand<\/a> is not the only trend influencing a major technical overhaul of the built world and its surroundings. Equally important to the volume and delivery of energy for new facilities and others is its sustainability and impact on the environment.<\/p>\n

Steve Dowd, chief investment officer of private infrastructure strategies, sees a widespread transition toward a digital economy as motivating an \u201cenergy transition toward decarbonization and electrification,\u201d a necessity given large-scale development of data centers, mobile phone towers and fiber networks. \u201cNobody is building a coal plant in the developed world, and corporations want clean power,\u201d Dowd concluded.<\/p>","protected":false},"excerpt":{"rendered":"

Despite the muddy capital markets picture, panelists at CBRE Investment Management\u2019s press luncheon were largely upbeat about fundamentals.<\/p>\n","protected":false},"author":3012,"featured_media":1004704426,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21808,21748,21783,21742,21747,51037],"tags":[51764],"class_list":["post-1004704425","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-featured","category-industrial","category-investment","category-latest","category-office","category-trends","tag-cbre-investment-management"],"acf":[],"yoast_head":"\nCBRE Investment Management\u2019s CRE Outlook - CPE<\/title>\n<meta name=\"description\" content=\"Experts at CBRE Investment Management\u2019s 2024 Press Luncheon were optimistic about the state of commercial real estate in 2024 and beyond.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/opportunities-ahead-in-cbre-investment-managements-cre-outlook\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"CRE Experts See Opportunities Ahead\" \/>\n<meta property=\"og:description\" content=\"Experts at CBRE Investment Management\u2019s 2024 Press Luncheon were optimistic about the state of commercial real estate in 2024 and beyond.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/opportunities-ahead-in-cbre-investment-managements-cre-outlook\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2024-03-01T12:11:46+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2024-03-06T17:12:28+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2024\/02\/Press-Briefing-Group-12-e1709242747566.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"3998\" \/>\n\t<meta property=\"og:image:height\" content=\"2997\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Gabriel Frank\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/opportunities-ahead-in-cbre-investment-managements-cre-outlook\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/opportunities-ahead-in-cbre-investment-managements-cre-outlook\/\",\"name\":\"CBRE Investment Management\u2019s CRE Outlook - 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