Colliers Capital Markets recently launched its third Global Investor Outlook Report. This report examines investor sentiment, strategies, and scenarios that will set the stage for the 2023 global real estate markets. Some of the key takeaways for the Americas region are highlighted below.
Unsurprisingly, investors expect values to contract and yields to expand.
Investors are looking to multifamily as a safe harbor. Multifamily is the most sought-after asset class, overtaking 2022’s top choice, industrial.
Last-mile and big-box distribution properties are the top focus of industrial investors. Globally, investors are showing a penchant for first-mile facilities due to onshoring activities.
“The sentiment is different from other recessions I’ve been through. The fundamentals are so good. This is really a capital markets-driven disruption; investors don’t fear that fundamentals will fall off significantly. They believe that the industrial market, for the long term, is still going to be strong.”
Michael Kendall, U.S. Capital Markets Board of Advisors, Industrial Lead
ESG is having real impacts on investors’ portfolios. This trend is most apparent for office players. CBD office investors are focused on top-rated, ESG-compliant assets.
Retail investors are also seeking safety. Their first choice is grocery-anchored centers. Investors are also considering repositioning assets or change of use plays.
The rapid rebound in hotel fundamentals, particularly on the high end of the market, has investors looking to luxury hotels. This hotel class held from 2022 as the top investment target.
There has been no change in which alternative asset classes are most in favor. Life science, data centers, and student housing remain the top three.
Growth markets, or secondary and tertiary cities, are a bigger focus in the Americas relative to the rest of the globe by a wide margin.
Americas investors are more optimistic about economic growth, energy supply/costs, deglobalization risk, and demographics.
Investors are concerned about the cost of capital, the impact of inflation, cybersecurity, and talent availability. In 2022, inflation was an unclear market trend. In 2023, it is clearly a negative.
“The first thing that fills the void (in financing) is that new funding sources are becoming available from the private side, in terms of debt. People are stepping into that void and charging equity- type returns for their capital. New capital is also forming in debt fund vehicles to provide a greater range in the capital stack.”
Frank Petz, U.S. Capital Markets Board of Advisors, Office Lead
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