Recap of the 2021 CRE market

January 26, 2022

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2021 has been a crazy year to say the least! Between uncertain times, record setting inflation numbers (the US CPI Inflation index rose by 7% YoY in December 2021), a change of the working environment landscape, supply-chains disruptions, restricted international travel just name of the few.

Despite all those events & uncertainty CRE transactions hit a record 809B$ in transactions according to Real Capital Analytics data, almost double to which of 2020 with the leading sectors being multifamily and industrials both achieving 335.3B$ and 166B$ respectively.

This increase in transactions in the multifamily and industrial sector surely led to a compression of cap rates.

According to the CBRE Cap Rate Survey of the first half of 2021, no US suburban multifamily market reported an increase in cap rates, with the majority witnessing a compression of cap rates in comparison to the second half of 2019.

 In regards to the industrial sector, every US industrial market reported lower cap rates in comparison to the second half of 2019 showing the growing appetite for this sector among both private & institutional investors

The hospitality sector which has been one of the most hit during the crisis, slowly got back in tracks which according to the American Hotel & Lodging Association averaged a US average of 52.5 percent annual hotel occupancy, an increase of 8.5 points from 2020 but still trailing behind the 65 percent number recorded in 2019.

Offices still remain an uncertain sector with the development of remote working and if the post-crisis will allow the office sector to get back to pre-crisis recorded numbers.

On a positive note, the U.S. office market did register a positive net absorption for the first time since the onset of the crisis during the fourth quarter, leasing velocity increased by 9.2% in Q4, lifting full-year leasing volume 14.6% above 2020 levels, while sublease space stabilized and vacancy plateaued according to JLL research


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