Weekly Macro Update: The Impact of COVID-19 on Commercial Real Estate Capital Markets
The Quick Read:
- The pandemic-induced recession is having a profound impact on commercial real estate (CRE). Unlike the global financial crisis (GFC), when volumes and pricing for all property types plummeted, sectors supported by structural tailwinds have held up relatively well so far.
- Apartments, industrial and office comprised nearly 80% of the total transaction volume for the second quarter, whereas sectors facing secular headwinds, such as hotels and retail, experienced a steep pullback in transaction volumes.
- Looking forward, we expect that structural forces underpinning demand for the major property types will continue to widen the gulf between “winners” and “losers,” effectively shaping the CRE of tomorrow.
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