ALABAMA REAL ESTATE JOURNAL

Recalibration of Commercial Real Estate Investment Strategies Needed in 2020

ACRE Director of Research and Corporate Engagement and CCIM Chief Economist KC Conway released a special report entitled “Vector Calibration: 2020 Capital Markets” that reconciles the plethora of data and conflicting views to provide the industry with a comprehensive resource for reallocating capital and realigning commercial real estate investment strategies in 2020.

Conway will speak on this topic as well as lead a capital markets panel at ACREcom20 on February 7, 2020, at The Club in Birmingham. For more information or to register, visit ACREcom.info

“This year is especially important for CRE pros to understand where and how much investment activity to deploy to be successful,” says Conway. “Relying on traditional metrics is a recipe for an oversimplified, inaccurate analysis of the capital markets. This report provides a thorough and effective approach to answer this increasingly complex question.”

For one, the report posits that eight primary indicators have proven effective in determining continued economic growth or, conversely, the onset of a market correction — GDP; employment; consumer optimism and total retail sales; small business activity and optimism; corporate earnings; FDIC-insured bank lending activity and income growth; CMBS and macro-CRE loan performance and delinquency; and commercial property price indices.

In the report, Conway also examines the trends, drivers, and impacts of all capital sources flowing in and out of CRE in the United States, including REITs, private and public equity, and foreign investment. He also includes five pro tips for commercial real estate practitioners in 2020:

  1. 1. Searching for viable assets given a landscape that has a dearth of properties for sale.
  2. 2. Ensuring that assets, while fully priced, are not over-priced.
  3. 3. Understanding that while CRE debt capital is healthy today, risks lie ahead.
  4. 4. Incorporating housing affordability as a cogent investment driver or deterrent in all markets.
  5. 5. Three letters: E-S-G (environmental, social, and governance).

“The commercial real estate industry becomes more complex each year, raising the bar for the level of sophisticated analysis required,” says 2020 CCIM Institute President Eddie D. Blanton, CCIM. “The insights and expertise of our chief economist are precisely what today’s CRE professional needs to continue to stay ahead of the curve.”

The full 4Q/1Q2019 report can be downloaded for free at www.ccim.com/insights.

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