The launch started on a sour note in December and January 2022, with the wide spread of the Omicron version across the country. In addition to a COVID-19 wave of previously unseen proportions, the US was facing a steep rise in inflation and political deadlock in Washington. And while the Omicron wave has subsided, inflation momentum is still high and Congress is unable to pass more legislation as politicians shift their focus from governance to campaigning.
Furthermore, recent days have ushered in new uncertainty on the international front, thanks to Russia’s incursion into Ukraine and further escalation with Vladimir Putin. This has already prompted a reaction from Western leaders in the form of sanctions, which could escalate if the Russian government decides to take things further. Those restrictions could potentially worsen inflation in the US, especially when it comes to gas prices.
Yet amid the never-ending disruption, it is important to note positive trends and the commercial real estate industry in particular has a lot to be thankful for.
For one thing, two years into a global pandemic, the wave of the property crisis that was anticipated in the multifamily, office, retail and hotel sectors never materialized. Troubled hotels are just starting to hit the market and there is a hunger for them by buyers who expect a jump in demand. After a long break, investors are also looking at regional mall acquisitions, in some cases planning to keep Class-A malls operating while the property is not viable as retail in others, converting them to other asset types. There are plans to redevelop. Even in the office sector, which is lagging behind other commercial real estate sectors in recovery, there are signs that demand from both tenants and investors is coming back.
All of this is happening in an environment where, despite the expected increase in the federal funds rate throughout the year, commercial real estate lenders continue to reduce property loans and investors are increasingly looking at real estate assets as a hedge against inflation. looking in. In this story, we look at how banks look poised to provide plenty of liquidity to trusted borrowers in the coming year. And CMBS issuance hit a 14-year high last year, driven by, among other things, single-asset single-borrower deals and demand to refinance 10-year loans.
All these developments position the commercial real estate industry for another good year in 2022. And expect Omicron to be the last major wave of the virus for some time (or at all) with more positive trends on asset-level fundamentals. coming months.
Read all these stories and more in our Q1 2022 digital edition.
Contact Elaine Misonzhnik [email protected],
