Real News from RealNex

By Jeffrey D. Fisher, Ph.D.

In the RealNex Q2 2022 Commercial Real Estate Market Update, Dr. Jeffrey Fisher, RealNex Head of Data and Research, presented findings on the state of pricing and investment activity in light of high inflation and rising interest rates. Entitled “Back to Normal”, commercial real estate markets continued to perform above long-term trend although showing signs of an inflection point.

By Jeffrey D. Fisher, Ph.D.

The National Council of Real Estate Investment Fiduciaries (www.NCREIF.org) tracks the performance of over 10,000 investment-grade, income-producing properties with a market value of $897 billion. The properties are held in funds that are managed by investment management firms on behalf of their investors.  The market value breakdown by property type is about 28% office, 27% apartment, 15% retail, 30% industrial and less than 1% hotel properties.  The NPI includes property data covering over 100 CBSAs. The quarterly total return for the NPI was 5.33%% for the first quarter of 2022 and the rolling annual return for the past four quarters was 21.86% which is the highest since the first quarter of 1980 and the second highest in the 44-year history of the NPI.

We have heard a lot in recent years about so-called “big data.”  Having spent my career doing research and creating products using data, I was intrigued to learn more about how big data might be used for commercial real estate.

Sam Zell (pictured left) recently stated: “The real estate cycle is nearing its end” (Pensions & Investments, May 1, 2017).  We must admit that Sam had great timing when he sold his Equity Office REIT to Blackstone in 2007 which was the peak of the last cycle.