It’s been an eventful year for CRE players. Downward pressure on prices among many other micro factors all sit against an economic backdrop filled with uncertainty. To help you navigate this evolving market environment and capitalize on opportunities, please enjoy our annual Green Street Year in Review, which includes valuable forward-looking insight from Director of Research Cedrik Lachance. We also recap our must-read reports and exclusive insights across key topical themes, plus new tools and more from 2023 that have provided essential support to our clients throughout a year igniting many more questions than answers. Connect with us so we can discuss how Green Street can similarly support you next year and beyond.

Topical Themes, Reports & Sample Reports

CRE Values: Property pricing down 22% from March ’22 peak; examine the fundamental drivers of valuation and their effect on share prices, sector performances, transaction volumes and more.

• Heard on the Beach: A Theory of Everything (June): As is the case across the 24/7 world of investment punditry, real estate talking heads are easily distracted by the shiny object du jour. It shouldn’t be so difficult, however, as there are only four primary drivers of return differentials in the arena, and it is not difficult to assess the impact each is having on a regular basis. 
• Property Insights: Quarterly Transaction Trends (November): CRE transaction volume is a critical indicator of market health. Green Street’s Sales Comps database provides actionable insight on deals of $5M and up. 3Q23 sales volume was down ~50% year-over-year and ~15% sequentially. Spiking interest rates in 3Q negatively impacted buyer appetite. Access the full report.
• Real-Time U.S. & Pan-Euro Commercial Property Price Index (CPPI): Green Street’s Commercial Property Price Index is a time series of unleveraged U.S. commercial property values that captures the prices at which commercial real estate transactions are currently being negotiated and contracted.

Spike in Real Rates: A march higher in interest rates has made ’23 feel like a bad rerun of the ’22 movie; observe lending market components and fluctuations which inevitably correlate to property valuation and risk.

• Heard on the Beach: To Survive Till ’25, Don’t Snore in ’24 (November): Like all asset classes, CRE gets pushed and pulled by the gyrations of interest rates, but it is the driver of the latter that most determines the fate of the former.
• Heard on the Beach: The Spread Effect (June): The information emanating from the bond market provides valuable insight into the forces influencing property valuations. One major driver – the duration effect – was in full display throughout 2022 given the rise in real rates. However, an equally important signal is how fixed income investors are perceiving risk via credit spreads.

ESG: Factoring “E” into CRE underwriting is an increasingly important valuation input; analyze key "E" metrics at the market and sector levels to interpret "E" impacts on long-term growth, cap-ex, and insurance costs.

• Property Insights: Your “E” Sensitivity Training (February): Widely different regulations and emission intensities are included when factoring "E" impact in underwriting. Sector-level differences matter at least twice as much as intra-sector differences. Learn more in this blog post.
• Heard on the Beach: A Pinch of Green (April): It’s hard to ignore the drumbeat of nearly every Western government’s march to a carbon neutral world. Landlords are facing increasingly stringent demands to decarbonize and modernize buildings or face monetary penalties and/or obsolescence. Real estate investors should strive to price current and future decarbonization costs and therefore have a view on the “E” in “ESG”. 

Debt Markets: The flow of debt to CRE has and will likely remain depressed in the near-term; assess how lending standards, rising costs, loan defaults, and banking struggles cause difficulties for near-term maturities and refinancing.

• Property Insights: Wall of Worry (July): The ebb and flow of credit availability can have important ramifications for real estate prices. In general, when credit is created, transaction activity increases, pushing up prices and making borrowers look more creditworthy. Less favorable loan terms could result in owners needing to shore up additional equity to renew maturing loans and a failure to do so could result in forced sales, leading to further declines in real estate prices. 
• Heard on the Thames - Everybody Calm Down (September): A well-functioning commercial real estate market that enjoys good price discovery relies on readily available debt that can seamlessly refinance maturing loans while partly funding new acquisitions and developments. When credit flows pull back, transaction volumes stall, and prices usually wobble. Click here to download more Heard on the Thames insights.
• Debt Insight: Tracking Real Estate Debt (October): The flow of debt to CRE is depressed relative to history. Higher Treasury rates causing pain; CRE debt spreads have risen more than corporates. The appetite to borrow and lend has slowed dramatically among all participants.

CRE Fundamentals: M-RevPAF growth still solid, but it's decelerating somewhat faster than expected; evaluate how developments in operating fundamentals translate to declines in property prices, transaction activity, and overall fiscal health.

• U.S. Commercial Property Outlook (December): The rise in 10-year Treasury yields from the high-3% range this summer to a peak of 5% in mid-October upended the commercial real estate transaction market and caused widespread declines in pricing. Property prices have fallen 6% over the past three months and 22% from their March '22 peak. Gain additional insights from the most recent related webinar replay from September. 
• Pan-European Commercial Property Outlook (October): Pan-European CRE prices (B/B+ quality) decreased by ~8% YTD; c.3% in the past six months. Retail and office prices hit hardest; residential and industrial yield expansion offset by growing cashflows. Property prices could fall ~10% by the summer of ’24; would then be down 1/3^rd since May-22 peak.
• Property Insights: Fiscal Friends and Foes (November): Prospective changes to tax burdens imposed on residents and landlords across metros can have an important impact on future total returns from CRE investing. Quantifying the likelihood of tax policy changes and pricing it into real estate requires art and science yet can also prove an important driver of future returns.

Sector Themes: Current topics of interest at the sector-level; rising growth forecasts, market values relative to costs, risk-adjusted expected returns, portfolio assessments, demand across different markets, and the key factors of cap-ex.

• Data Center Insights: Artificial Intelligence: Buy the Hype or Sell the Data Center Sector? (July): Is the hype real? Or are we in for a letdown like prior emerging tech that failed to meet expectations ranging from 5G to the Internet of Things to the Metaverse?
• Euro Residential Insights: Replacement Cost ≈ Redundant Comps (March): Replacement cost analysis is a commonly used tool in the real estate investment world. However, every analytical framework has its drawbacks and the same is true with replacement cost.
• Industrial Insights: Outdoor Storage: A Beautiful Ugly Duckling (April): Industrial outdoor storage (“IOS”) is a niche commercial property type that has grown in popularity among institutions in recent years amid the broader industrial boom. Investor demand for IOS has been buoyed by strong recent operating results, favorable long-term supply demand dynamics, and a de minimis cap-ex burden. Learn more in our blog post.
• Central London Retail Insights: A Forensic Investigation (November): Whilst the holistic takeaway for London’s high-street retail is negative, granular analysis – using data from Local Data Company (LDC; a recently acquired and now Green Street-owned U.K. retail analytics company) – of two distinct portfolios suggests the negative read across is less severe than at first blush. Download the report or watch the webinar replay.
• Euro Office Insights: Licking Its Wounds (June): Three years after the onset of the global pandemic, European office market fundamentals have seemingly held up relatively well, and certainly better than detractors were projecting. Yet, as employers attempt to bring employees back to the office with mixed success, it has become clear in the data that hybrid work has dented office demand over the past few years.  
• Self-Storage Insights: Rolling Up the Doors on Cap-Ex (October): Green Street’s inaugural deep-dive into self-storage cap-ex sheds light as public and private market data on the topic is lacking. Self-storage is expected to deliver slightly below-avg. returns in the private market.

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Notable Product Enhancements in 2023

Coverage Expansion

• U.S. Senior Housing Sector: Senior Housing data and analytics across the top 50 U.S. markets added to Market Data
• REIT Initiations: U.S.: EPRT, BNL, DOC, IVT, LXP, IRT; Euro: CTP, LXI, SUPR, AT1, SAGA, PNDX
• Expanded Research Through New Reports: Commercial Property Monthly (global), Euro Heard on the Thames, and Euro Model Portfolio

Enriched Market Data Solution 

• European Market Forecasts Scenarios: Access five-year forecasts for operating fundamentals and valuation metrics
• U.S. Effective Rent Growth & Occupancy: Access historical time series data for U.S. market-level effective rent growth and occupancy
• U.S. Rent Comps: Leverage a granular, asset-level view of effective rents across four sectors

Data Delivery Services

• Detailed NAV Models: Provide a deeper view into the valuation drivers of our covered U.S. and European public companies
• Snowflake: Seamlessly query on our data or build connections in your company’s preferred integrations
• Excel Add-In: New user interface with streamlined authentication allows you to power your models with real-time insights

Other Product Enhancements

• “E” Metrics: “E” Sector Sensitivity, potential costs, and impact – helping capital allocators frame risks and opportunities from a green perspective
• U.S AVM 2.0: Self-select sales comparables and customize weights of three valuation approaches across 384 U.S metros
• Green Street Sales Comps in React News: Sales Comps and transaction data added to React News articles

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Spotlight on Our Webinar Series Favorites

U.S. Webinars

• Challenges Ahead as ’24 Looms: Discussion across Residential, Industrial, Office, Data Center, Self-Storage, and Retail with our Research Sector Heads to hear our views on the outlook for each.
• Identifying CRE Opportunities: A Market-Level Analysis: Managing Directors Joi Mar and Seth Laughlin discuss key markets and the data/analytics you need to optimize investment decisions in this dynamic macro environment.
• The Upside of “E”-Valuating Portfolios Through an Environmental Lens: Global attention from regulators and investors on “E” is rapidly accelerating. Environmental issues in CRE, particularly as they relate to energy and emissions, are complex and opaque. Learn how Green Street is incorporating "E" into our property underwriting.

Pan-European Webinars

• U.K. Retail Webinar: A Forensic Approach: Green Street and newly acquired Local Data Company (LDC) – the UK’s most accurate retail location insight provider – team up to discuss in-depth market analysis.
• Pan-European Outlook: Patience is a Virtue: Green Street’s Research Sector Heads discuss opportunities and confront challenges facing Pan-Euro property sectors as we wrap up ‘23 and anticipate what’s likely in store for pricing in early ’24.
• Pan-European Market Data: Spotting the Right Opportunities: Green Street’s European Market Data and Deals solution provides proprietary analytics and actionable intelligence to help private and public CRE investors make better investment and portfolio management decisions, mitigate risk, and raise capital more effectively.

View our Full Webinar Replay Library & Schedule

Voice of the Green Street Customer in 2023

"The combination of Green Street’s high-quality sector and market analysis, market rankings, and weekly dose of Real Estate Alert is unique and unbeatable. They allow us to remain informed on the state of the market/sector and provide good insights into the future direction of both." - Private Equity CIO

"Green Street helps our business decision-making strategy and success by providing relative data and analysis in real-time that is sector-specific to our business. We use Green Street to benchmark our portfolios, evaluate potential new markets, and stay apprised of macro developments in the real estate industry." - Real Estate Company CEO

“Hands down, Green Street has the best data and analysts of any CRE research firm. Green Street’s reputation is extensive and unrivaled. Their credibility is second to none.” - Real Estate Company Director & Board Member

“Green Street’s research platform provides a level of consolidated data and analysis that’s just not available elsewhere. The services and resources you’ll receive as a result are markedly superior to, and more detailed than, those provided by other market competitors.” – Real Estate Company CEO

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How Can Green Street Help You?

Data & Analytics: Proprietary analytics and actionable intelligence for public and private market investors

Research: Unbiased macro, sector, market, and company-level commercial estate research & analysis

News: Exclusive market-moving news, deal insights, databases and market participant rankings

Advisory: Strategic advice for CRE investors and operators to enhance value for stakeholders