Federal Reserve raised to 0.5%<\/a> earlier this month, and the average interest rate on commercial mortgages, which is around 5%. \u201cThe market is anticipating multiple rounds of increases,\u201d he said. \u201cAny further rises in the federal rate are already factored in.\u201d<\/p>\n\n\n\nYun also predicts that inflation will remain high due to elevated oil prices. However, there are positive signs in the recovering job market, which is approaching pre-pandemic levels. In fact, it\u2019s performing better than that in the Mountain and South regions of the country. \u201cThe job market is very important for commercial,\u201d Yun said, \u201cespecially for retail and office.\u201d<\/p>\n\n\n\n
Positive Signs in all Four Sectors<\/h4>\n\n\n\n
Demand for rental housing is being buoyed by a net increase in household formation, indicating more younger adults are moving out of their parents\u2019 basements. Occupancy rates have increased over the last year for multifamily, industrial, retail, and office properties, and investors stepped up acquisitions in all four sectors in the fourth quarter of 2021.<\/p>\n\n\n\n
Yun expressed continued uncertainty about the office sector: A significant number of employees are still working remotely or utilizing a hybrid office model. But while gateway cities like New York, San Francisco, and Boston have been experiencing negative net absorption since the second quarter of 2020, smaller metros like Austin, Texas; Palm Beach, Fla.; and Durham, N.C., have seen positive absorption in the same time period. \u201cThe office sector is somewhat wobbly,\u201d Yun said. \u201cBut if you look closely, you will see divergence in some areas. It\u2019s not the same everywhere.\u201d<\/p>\n\n\n\n
REITs Show Strong Investment Potential<\/h4>\n\n\n\n
Real estate investment trusts have proven to be an excellent hedge against inflation, outperforming the S&P 500 in periods of low, moderate, and high inflation, said Nicole Funari, vice president of research at the National Association of REITs. Funari attributed part of this resilience to the increasingly diverse REIT portfolios. Emerging sectors, such as infrastructure (e.g., cell towers), data centers, and self-storage facilities, accounted for only 6% of the industry market cap in 2000. As of December 2021, these sectors accounted for 41%. \u201cWe have remarkable growth in new sectors,\u201d said Funari. \u201cThe diversity of properties has led to very strong performance.\u201d<\/p>\n\n\n\n
Funari also said areas of REIT investment that struggled during the pandemic are now picking up speed. The lodging, health care, and office markets\u2014which all saw negative returns at the height of COVID-19 restrictions\u2014posted positive returns from December 2021 to March 2022 of 9.9%, 7.6%, and 4.6%, respectively. Funari saw further good signs for REITs, noting that acquisitions are up across all sectors in the fourth quarter of 2021. She pointed to self-storage as a particularly hot sector.<\/p>\n\n\n\n
Resurgence in Retail<\/h4>\n\n\n\n
Brandon Hardin, an NAR research economist, reported that retail is showing excellent signs of growth, posting sizable gains in employment and wages in the first quarter of 2022\u2014and actually exceeding 2019 levels. Increased income opens the potential for more consumer spending, Hardin noted, adding that data early in the year is already demonstrating this growth. Retail sales showed a sharp year-over-year increase in February, led by gas stations at 37%, food and beverage at 33%, and clothing stores at 30%. \u201cConsumers are feeling better about returning to pre-pandemic activities,\u201d Hardin said. \u201cPeople are going out to dinner, going out to watch sports.\u201d<\/p>\n\n\n\n
Hardin also noted an increase in net absorption for retail space\u2014including beleaguered shopping malls\u2014which rose to a total 96 million square feet as of last Sunday. Further, e-commerce sales began to plateau from the fourth quarter of 2020 through the fourth quarter of 2021 due to consumers returning to pre-pandemic activities but also the ingenuity of brick-and-mortar stores, Hardin said. Many businesses have begun to build \u201csafety inventory,\u201d meaning they have extra stock on hand rather than operating with the bare minimum necessary to cover sales. \u201cThey\u2019re moving from \u2018just in time\u2019 to \u2018just in case,\u2019 \u201d Hardin said. \u201cThis puts them in a better position with consumers.\u201d<\/p>\n\n\n\n
\u00a9National Association of REALTORS\u00ae
Reprinted with permission<\/p>\n","protected":false},"excerpt":{"rendered":"
Consumers are resuming pre-pandemic activities, such as working at the office, dining out, and attending sports events, which is boosting all commercial sectors. Despite the financial pressures of rising interest rates and high inflation, consumers are returning to their pre-pandemic lifestyles, providing a boost to commercial real estate across all sectors, experts said Wednesday at … <\/p>\n
Continue reading<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16,8],"tags":[5,32,4,9],"class_list":["post-21414","post","type-post","status-publish","format-standard","hentry","category-news","category-real-estate-tips","tag-anthony-didonato","tag-news","tag-real-estate","tag-tips","item-wrap"],"yoast_head":"\nCommercial Real Estate Recovery Kicks Into High Gear - Real Estate Agent and Sales in PA - Anthony DiDonato Broomall, Media, Delaware County and surrounding areas in Pennsylvania<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.anthonydidonato.net\/wordpress\/commercial-real-estate-recovery-kicks-into-high-gear\/\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"admin\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"4 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/commercial-real-estate-recovery-kicks-into-high-gear\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/commercial-real-estate-recovery-kicks-into-high-gear\\\/\"},\"author\":{\"name\":\"admin\",\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/#\\\/schema\\\/person\\\/964792b6994e8cc4cbddc36ad4824908\"},\"headline\":\"Commercial Real Estate Recovery Kicks Into High Gear\",\"datePublished\":\"2022-12-13T13:19:52+00:00\",\"dateModified\":\"2022-12-13T13:19:53+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/commercial-real-estate-recovery-kicks-into-high-gear\\\/\"},\"wordCount\":783,\"publisher\":{\"@id\":\"http:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/#\\\/schema\\\/person\\\/964792b6994e8cc4cbddc36ad4824908\"},\"keywords\":[\"Anthony DiDonato\",\"News\",\"Real Estate\",\"tips\"],\"articleSection\":[\"News\",\"Real Estate Tips\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/commercial-real-estate-recovery-kicks-into-high-gear\\\/\",\"url\":\"https:\\\/\\\/www.anthonydidonato.net\\\/wordpress\\\/commercial-real-estate-recovery-kicks-into-high-gear\\\/\",\"name\":\"Commercial Real Estate Recovery Kicks Into High Gear - 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