Green Street

Real Estate Alert: Broker Rankings Special Supplement

Sales of smaller commercial real estate properties fell 24% in 2023, but the continued resiliency of the private-capital space resulted in volume that easily outpaced pre-pandemic figures. Some $82.70 billion of properties worth $5 million to $25 million changed hands last year, down from $109.24 billion in the prior year, according to Real Estate Alert’s fourth annual survey of the market segment.

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Real Estate Alert: Average Office Prices Down 22% This Year

Average sale prices for office and retail properties plunged further in the past year, multifamily valuations dropped after peaking in 2022, and industrial properties and hotels are trading at their highest levels ever. Those are the top-line findings of Real Estate Alert’s inaugural review of weighted average sale prices on a per-sf and per-unit basis for trades worth $25 million and up in Green Street’s Sales Comps Database. 

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Property Insights: Quarterly Transaction Trends

Green Street has published a new report stating that first-quarter sales volume dropped 70% year-over-year across all four of the core sectors: Office, Industrial, Apartments and Retail, as property values continue to erode. U.S. Sales Comps data on transactions of $5 million and higher was utilized to produce the new report entitled, Property Insights: Quarterly Transaction Trends.

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Property Insights: Roller Coaster

With bond yields on a rollercoaster and mostly rising fervently in recent weeks, asset values of all stripes have been negatively affected. Real yields have risen while future inflation expectations remain surprisingly well anchored. Even with a rally, albeit bumpy, to begin October, equities (including REITs) and bonds have been hit hard by the dual bear markets in these key asset classes.    

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Heard on the Beach: Will the Cure Be Worse Than the Disease?

Rising real rates do damage to values, while higher inflation is benign. That this year’s rate spike has been primarily a function of higher real rates explains the weak start to the year. Seldom has the range of economic possibilities been as varied as it is today. Recession odds are up even as interest rates have jumped in reaction to the release of the inflation genie. The spike in yields has clobbered REIT share prices this year, and property prices have begun to drift lower. Today’s investment professionals lack experience to help assess the impact that stubborn inflation might have on real estate, but lessons from past interest rate/inflation scares offer insight.  

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Heard on the Beach: Herd Community

Pandemic-era uncertainty surrounding remote work, fiscal health, and politics suggest a wide range of potential outcomes for big cities. These factors may upend the long running megatrend toward urbanization, which carries implications for Sun Belt versus gateway market dynamics and the urban-suburban balance within metros. Recent market-level employment trends are tightly-linked with WFH utilization rates. And a tail risk worth exploring is the potential for San Francisco or NYC to follow Detroit’s path.

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