As strong headwinds continue to collide with strong tailwinds, the macroeconomic environment is becoming increasingly complex for real estate investors to navigate.
In this first part, we review the historical relationship between the economy, inflation, interest rates and commercial real estate price movements.
The second part will take the learnings from part one and analyze them through the lens of the current environment.
Key takeaways from this first report include:
- U.S. property returns have consistently outpaced inflation historically
- CRE is thought to provide an effective hedge against inflation risk
- Investors gravitate to property during periods of elevated inflation
- However, upward forces on cap rates have increased markedly in the last few months