NEWPORT BEACH, CA—A confluence of factors is creating what investment management giant Pimco calls “a blast of volatility for US commercial real estate that we anticipate could lower overall private US CRE prices by as much as 5% over the next 12 months.” Within that volatile atmosphere, though, “attractive investment opportunities” will be created for “nimble investment platforms,” Pimco's John Murray and Anthony Clarke write in a new report, titled US Real Estate: A Storm Is Brewing.
The litany of factors causing the turbulence—“volatility in public markets, tightened regulations, maturing loans and uncertain foreign capital flows”—is familiar to industry players by now. These are especially pertinent to CRE, write managing director Murray and VP Clarke, because pricing gains since the downturn have been driven not by improving fundamentals but by capital flows.
“But capital flows have grown unstable over the past year due to fears over interest rate hikes and, more recently, events such as political and economic uncertainty in China,” Murray and Clarke write. “While this instability began in the public CRE markets, it has blown in to private CRE as well,” especially in non-major markets.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
