By Ted Knutson | February 04, 2022
Headwinds are likely to moderate expansion for 2022.
Commercial real estate had a banner year in the Americas but headwinds are likely to moderate expansion for 2022, says a new report from CBRE.
“Another year of investment growth is expected in 2022, albeit at a more moderate pace than in 2021,” said Richard Barkham, Global Chief Economist for CBRE. “Continued economic growth and low-interest rates will fuel investment activity. Headwinds, such as rising inflation, geopolitical tensions, and the potential for a COVID-19 resurgence, may cause some jitters in Q1 2022.”
CBRE estimates that annual global investment volume will increase by roughly 8% in 2022, Barkham added.
This reflects a similar assessment the National Association of Realtors made in January when it said that commercial real estate can be expected to perform well this year despite the prospect of higher interest rates.
Annual investment volume surged 86% to nearly $776 billion in the Americas with the fourth quarter record having a volume of $305 billion, up by 90%, CBRE said.
The fourth-quarter increase, CBRE said, was fueled by 116% growth in multifamily investment volume as Sun Belt markets continued to see robust growth, while gateway markets began to recover—particularly in high-quality office assets.
The multifamily sector’s share of total investment grew to 45% in Q4 2021, up from 41% in Q3 2021 and above its 2015-2019 of 28%, driven primarily by Sun Belt markets with gateway markets such as San Francisco, Los Angeles, and Chicago all had year-over-year growth of more than 110%.
In the fourth quarter, the industrial sector accounted for 22% of total investment volume on par with growth in the previous two quarters but down from its pandemic-era high of 27% the same quarter a year earlier.
Industrial investment increased 55% year-over-year to $64 billion in the last quarter of 2021 with full-year investment in the sector increasing by 53% year-over-year to $160 billion.
Retail investment increased by 119% year-over-year to $34 billion in Q4 2021, accounting for 11% of total investment volume in the period, its highest share since Q2 2020.
The full-year increase for retail was up 84% to a total of $74 billion.
The office sector saw its share of total investment falling to 17%. At the same time, the office market captured its highest quarterly volume of $120 billion since Q4 2018—an increase of 73% from Q4 2020 and 19% from Q4 2019.
Full-year 2021 office investment volume rose by 55% from 2020 to US$136 billion—just 5% shy of 2019’s total.
Hotel investment showed particular strength, rising 142% year-over-year in Q4 2021 to $12 billion, helping to take a full-year volume to $43 billion, a 238% increase from 2020.
