LOS ANGELES—Last week, Richard Barkham, global chief economist and head of Americas research at CBRE, served as opening keynote at the GlobeSt. Net Lease Fall 2022 national event and said that we are in for a hard landing. He also spoke about real estate and said that investment sales are dropping very quickly and believes they have further to drop.
"The Fed is very nervous about a big price drop in US real estate," he explained. "There has been some central bank action behind the scenes and there is a period of price discovery in the marketplace."
On the capital front, he said that while it is available, it is at a higher cost and more selective. Cap rates are also on the rise but it is across all sectors, he explained. "We don't quite know where it will settle out because we don't quite know where interest rates will settle out," he said, but for those well capitalized, he said that "this is an opportunity."
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Within the office sector, Barkham sees a flight to quality. "Occupiers are going for high quality and high amenity space because it isn't easy to get people back in the office." He plains that while it is trending up, it is slow due to the standoff between management and workers. "There are still new completions coming to market and the top 10% of office rents are going up but the bottom ones are going down… It is a bifurcated market."
Retail is surprisingly buoyant, he said. "All of the companies that went bust during Covid restructured and came back strong." The post pandemic revival is driving things and a resurgence is underway, he added.
He says that we are now also running out of "really good space" in retail since "we haven't really built it in 15 years." For the remainder of the year, he projects that 2022 will be the second highest year on the record but says that leasing volumes will be down next year, which might not be a bad thing. "There is an argument that it will push up vacancy rates, but another argument is that it is what we need."
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
