Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}
112021InflationSpotlightdaheronew750x480 112021InflationSpotlightdahero

Insights

What Rising Inflation Means for CRE Investing

Inflation has become a near-constant topic of conversation over the last several weeks.
In this report, we look at the factors contributing to rising prices in the U.S., how long elevated inflation rates are likely to continue, the role of the Federal Reserve, which is having to walk a narrower path than in prior economic expansions, as well as the major implications for commercial real estate investors.   

 Key Takeaways 

  • The U.S. economy is experiencing broad-based inflation at rates not seen since the late 1980s.   
  • Elevated inflation is being driven by both demand (stimulus, re-opening, excess savings, shifts in spending patterns) and supply-side factors (labor shortages, supply chain disruptions). Our analysis suggests that these factors will keep inflation uncomfortably high in the coming quarters, but the underlying pressures will fade as the pandemic-disruption fades and as the supply-side of the economy rushes to meet demand.   

  • Monetary conditions are as stimulating as they have ever been. For this reason, the Federal Reserve has scope to reduce accommodation as it recently did by beginning to taper its asset purchases without undue risk to the recovery. The Fed has the tools it needs to tame inflation.  

  • A tail risk to this outlook would be if wage growth increases substantially and/or if inflation expectations become unmoored. We view this as a low probability scenario, but one to watch.   

  • If inflation follows the most probable script—higher inflation for a period but not damaging to the economy—then property stands to benefit. Our analysis shows that every 1% increase in inflation is associated with a 1.1% increase in total returns. This environment also results in lower cap rates across property sectors.  

  • In other words, commercial real estate not only protects against higher inflation but provides outsize returns specifically in these environments. 

     

Download the report to learn more.  

Related Services

5-Key-Qs-About-Global-Recovery-WebCard
Insights

5 Key Investment Questions About the Global Recovery Journey

Our Global Recovery Journey webinar Q&A yielded outstanding discussion on a range of prescient topics. We’ve asked our expert speakers to address some of those we couldn’t get to in the allotted time.
Kevin Thorpe • 8/9/2021
Biden Tax Web Card (image)
Research • Investment

Biden Administration Tax Proposals: Implications for Commercial Real Estate

We evaluate several provisions of the Biden administration’s $4.5 trillion Build Back Better Plan that could acutely impact commercial real estate investment.
David Bitner • 5/18/2021
Instant Insight US Inflation
Research • Economy

U.S. Inflation: Should we be worried?

With inflation rising in the U.S. we look at how this impacts commercial real estate and what occupiers and investors can do to prepare.
Rebecca Rockey • 4/20/2021

Interested in learning more?

Get in touch and we can assist with any additional information you need.

Cushman & Wakefield uses cookies to analyze traffic and offer our customers the best experience on this website. Close this dialog to confirm your consent, or visit this page to learn more:
Cookie Notice

MORE OPTIONS
Agree and Close
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS