Green Street’s U.S. Sector Outlooks Examine Commercial Real Estate During Capital Markets Upheaval
The research reports and web platform have been updated with the latest data on fundamentals, growth forecasts, expected IRRs, and more.
NEWPORT BEACH, Calif., Feb. 2, 2023 – Green Street has released its 2023 Sector Outlooks, a series of forward-looking research reports highlighting operating fundamentals and valuations of U.S. commercial real estate during a period of capital markets volatility. The eight comprehensive reports offer deep market-level insight and analysis of the Apartment, Industrial, Office, Strip Center, Mall, Self-Storage, Senior Housing, and Single-Family Rental sectors to help market participants make the most informed capital allocation decisions.
Each Outlook contains the following sections for both public and private real estate market participants:
- Supply and Demand Analysis: A thorough analysis of the major factors affecting supply and demand dynamics and the risks and opportunities facing each sector
- Growth Forecasts: Sector forecasts through 2027 for operating fundamentals
- Valuation Metrics: A decade-plus of proprietary cap rate and asset value time series data
- Market Grades: Proprietary grades assigned to zip codes, submarkets, and markets that represent long-term rent growth potential.
“Fundamentals in the core sectors ─ with the exception of Office ─ were healthy in 2022,” explains Andrew McCulloch, Global Head of Data & Analytics at Green Street. “Despite an expected slowdown in the U.S. economy this year, rent and occupancy growth should remain solid across most sectors. Office rents and occupancy fell further in 2022, and the sector’s bottom is yet to be found. Green Street still expects work from home to reduce office demand by about 15% over time,” he says.
“In the Senior Housing sector, top-line prospects improved meaningfully last year, but expense pressures have and will likely continue to weigh on NOI growth. The sector is still early in its post-pandemic recovery and Market-RevPAF growth , Green Street’s proprietary measure of rent and occupancy growth, is expected to average 6.5% over the next five years,” says McCulloch.
“The recent return of seasonal patterns, lower mobility, and a portion of employees shifting back to office life have resulted in softening Self-Storage fundaments,” he says. “The outlook for NOI growth remains positive for 2023, but M-RevPAF growth is expected to turn negative due to tough 2022 comps, accelerated moveout activity and falling move-in rents.”
In terms of overall commercial real estate valuations, “price discovery across the board is limited, with buyers adjusting to higher costs of capital and wide bid/ask spreads,” says McCulloch. “The Green Street Commercial Property Price Index®—a measure of pricing for a broad spectrum of institutional quality properties — declined 13% in 2022.”
For more information on the Outlook reports, click on this link for a free sample report. To learn more about Green Street’s 2023 Self-Storage Sector Outlook, register for this upcoming Self-Storage webinar.
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