CRE-Finance Provides Perspective and Direction of Commercial Real Estate for 2021

Commercial real estate investors were relatively cautious at the beginning of 2020. According to industry surveys, the outlook for 2021 is much more optimistic.

OCEAN TOWNSHIP, NEW JERSEY, UNITED STATES, Jan. 4, 2021 / – The past year has dramatically changed the way people live and work, accelerating numerous structural changes that had already started before the COVID outbreak- 19 were in progress. CRE-Finance’s perspective on the commercial real estate industry is that this year companies started with generally strong financial stocks, but this year they have closed the gap between efficient operators and ineffective players in the industry. With suppressed interest rates and unprecedented quantitative easing, investors are now preparing their dry powder to capitalize on profitable investment opportunities in a variety of promising markets. CRE-Finance recorded an increase in the original volume in the 3rd and 4th quarters of 2020.

To take a closer look at what to expect in the next year, we’ve outlined our thoughts on the direction of commercial real estate in 2021.

Increased optimism and transaction volume in 2021
While commercial real estate investors were relatively cautious at the beginning of 2020, the outlook for 2021 is much more optimistic, according to several industry surveys. Domestic investors ended 2020 with a flurry of multi-family transaction volumes, and foreign investment in U.S. multi-family assets and single-family portfolios is expected to increase through 2021 as new types of investors such as sovereign wealth funds and overseas family offices are now entering the space for so long Borrower.

Investor interest is tied to transaction volume, and as an indication of that optimism, the amount of public and private equity available to finance commercial real estate is expected to increase in 2021 from this year’s levels. Nearly $ 200 billion worth of dry powder in North America is on the verge of impending core-plus, value-adding and opportunistic strategies for all property types, according to Preqin, and in addition to equity, it has exceeded capital raised for full 2019.

As a result, 2021 is expected to be a busy year for the commercial real estate industry in general. As evidence of this position, a recent NREI study of commercial real estate activity by HNWI shows that nearly 60% of respondents plan to increase their allocation to commercial real estate next year – a new high watermark in the poll’s five-year history.

New industrial plants are covered by good demand

Industrial assets were the unexpected winner of 2020, with logistics, storage and fulfillment well outperforming most real estate asset classes that year. The industry remained largely resilient during the COVID-19 pandemic, in large part due to increasing demand from sources such as e-commerce, consumer supply chain strategies, and the introduction of modern, high-throughput logistics facilities by logistics users.

Short-term fluctuations in property value could be a good buying opportunity in 2021
With the exception of industrial property, commercial property values ​​are likely to decline in the short term in 2021 as the economic impact of COVID-19 fully catches up with the commercial property sector. This downturn is not long-term, however, and according to a recent survey by the University of Monmouth’s Kmouthak Real Estate Institute, 90% of respondents expect asset prices to recover to pre-pandemic levels by 2021.

In total

2020 has been a difficult year for many, and keeping our families, friends and communities safe was a top priority for most. While a number of more completed during the year, property interest and transaction volume understandably declined across the board as investors withdrew from the uncertainties of the market and the unexpected changes in their own lives.
However, there have been a number of optimistic developments over the past few weeks, ranging from multiple COVID-19 vaccines to a surge in real estate transaction volume over the last two quarters of 2020. At the same time, total US national debt has exceeded annual GDP for the first time since World War II, and investors are increasingly looking for alternative ways to hedge against inflation and uncertainty.
Our recent deals Commercial Deals were selected based on the CRE Finance outlook for 2021 in addition to the underlying deal fundamentals. With everything we learned in 2020, we look forward to getting going this year with enthusiasm and seizing the new opportunities that will open up in 2021.

Todd Tretsky
CRE finance
+1 212-257-7305
email us here

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January 04, 2021 at 4:18 pm GMT

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