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Economists and industry analysts predict increased improvement for CRE, volume expected to reach $590B in 2023

Monday, May 24, 2021

Market predictions for commercial real estate are predicted to improve significantly over the next three years, according to the spring ULI Real Estate Economic Forecast.

Economists and industry analysts forecast that the current US economic recovery will remain robust from 2021-2023. Real estate market conditions as a whole are performing much better than six months ago.

The Real Estate Economic Forecast, produced by the ULI Center for Capital Markets and Real Estate, is based on a survey conducted from 42 economists and analysts at 39 leading real estate organizations.

Key Commercial Real Estate findings include:

  • Transaction volumes are predicted to increase to $500 billion in 2021, to $550 billion in 2022 and $590 billion in 2023, all well above the long-term annual average of $347 million.

  • Commercial real estate prices as measured by the Real Capital Analytics (RCA) Commercial Property Price Index are projected to rise by 4.2% in 2021, and by 5.0% in 2022 and 2023. The index rose by 5.2% in 2020, a very successful outcome given that the spring 2020 survey predicted a 7% decline for the year.

  • Total returns from unleveraged core real estate (NCREIF Property Index) are estimated at 4.5% in 2021, 5.9% in 2022 and 6.5% in 2022.

  • The availability rate for neighborhood and community retail centers is forecast to rise 60 basis points to 10.0 percent in 2021 and improve 9.8% by 2022. The fall forecast had the retail availability rate at 11.3% in 2022, indicative of a rebound in retail leasing.

Industry experts are expecting a strong CRE comeback that significantly reflects the US economic turnaround. The real estate market is predicted to recover more quickly from the pandemic than anyone thought was possible six months ago.

Source: ULI Forecast – UrbanLand
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