CBRE's 2024 Investor Intentions Survey Shows Increased Investment Activity
More than 50% of the investors surveyed by CBRE plan to buy more assets in 2024 than in 2023.
Jordan B. & Han-Gwon Lung
April 08, 2024
Together with
Good morning. CBRE says investment sentiment is picking up as more investors plan to buy assets in 2024 than in 2023. Plus, Greystar has dethroned MAA to become the largest apartment owner in the nation.
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Market Snapshot
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*Data as of 4/05/2024 market close.
INVESTMENT OUTLOOK
CBRE's 2024 Investor Intentions Survey Shows Increased Investment Activity
The Q1 2024 U.S. Investor Intentions Survey by CBRE spotlights a more optimistic investment landscape. Improved investor sentiment is easing concerns over high interest rates and credit conditions.
Confidence on the rise: The survey reveals a significant boost in investor confidence, with over 60% planning to ramp up their real estate acquisitions in 2024—a sharp rise from the mere 16% who said the same in 2023. This bullish outlook spans across developers, private equity funds, real estate funds, and REITs, signaling a broad-based recovery in investment appetite.
Figure 1: Investment activity expectations for 2024
Source: U.S. Investor Intentions Survey, CBRE Research, January 2024.
Recovery: Despite the current lower property values, 40% of investors are preparing to offload more assets in 2024, showing a notable uptick from the previous year's 14%. The survey anticipates a resurgence in both individual and market-wide transaction activities in the latter half of 2024, potentially even sooner if the 10-year Treasury yield falls faster than expected.
Figure 2: Expectation of when investment activity will pick up
Source: U.S. Investor Intentions Survey, CBRE Research, January 2024.
Preferred markets: Investors are eyeing large Sun Belt cities and active secondary markets, with Dallas, Miami, Raleigh, and Nashville leading the pack. Despite the Sun Belt's allure, gateway markets like Boston, New York City, and Washington, D.C. also rank high for investment returns.
Figure 3: Top 10 markets for total property returns
Source: U.S. Investor Intentions Survey, CBRE Research, January 2024.
Sector report: The multifamily and industrial sectors remain top picks, with a strong preference for high-quality Class A properties and strategic value-add opportunities in Class B/C assets. Across the board, investors are bracing for pricing discounts, especially in the office sector and shopping malls, reflecting a cautious but realistic approach to asset valuation. Lesser discounts are expected for multifamily and industrial & logistics assets, with grocery-anchored retail centers seen as the most stable.
➥ THE TAKEAWAY
Big picture: Despite lingering economic concerns, the outlook for 2024 is markedly more positive, with a majority of investors ready to increase their buying and selling activities. The anticipated decline in interest rates and a stabilization in financial conditions could usher in a more robust recovery in investment activity, especially in the second half of the year.
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✍️ Editor’s Picks
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Jobs report: Nonfarm payrolls surged by 303,000, surpassing expectations, with the unemployment rate dipping to 3.8% amid increased labor force participation.
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Identity clash: Palm Beach is grappled with a cultural shift, balancing its traditional elite with incoming younger generations and new social dynamics.
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Uncertainty: The Federal Reserve remains undecided on potential rate cuts as expected price discovery stalls, transaction volumes do not increase, and maturing loans are extended in anticipation of easier refinancing conditions.
🏘️ MULTIFAMILY
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LIHTC optimism: A majority of low-income housing tax credit syndicators anticipate more deal closures this year, rebounding from the slowdown caused by rising interest rates in 2023.
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Refinancing: Toll Brothers and The Carlyle Group nab $81 million for the refinancing of Emblem 120, a 289-unit residential property near Boston.
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Making moves: Hines steps into the BTR sector, targeting the Southeast due to rising demand for alternative rentals amid challenges in first-time home buying for many Americans.
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Austin expansion: Intracorp Homes announced a 270-unit condo project, Leland South Congress, supporting new housing development in South Austin, Texas.
🏭 Industrial
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Chip expansion: Electronics giant plans to more than double its semiconductor investment in Texas to about $44 billion, boosting U.S. advanced chip manufacturing.
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Heating up: New York City's outer boroughs see industrial leasing soar to 1 million square feet in Q1 2024, marking an 83% year-over-year increase, reports Cushman & Wakefield.
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Project milestone: IndiCap and AECOM-Canyon Partners finalize the first phase of Eastmark Center of Industry, encompassing five buildings and nearly 980,000 square feet in Mesa, Arizona.
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Funding: Lincoln Equities Group obtains a $53.5 million loan for the development of Belleville Logistics, a last-mile logistics campus near New York City.
🏬 RETAIL
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Retail crunch: JLL's analysis shows NYC retail space availability plunging to 15.4% in Q1 2024, a sharp decrease from both 2021 and pre-pandemic figures.
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End of an era: The last Boston Market in Delaware shines a dim light on the chain's stark decline from its '90s heyday to its current state, with only 27 stores remaining nationwide.
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Sold: Mercado at Scottsdale Ranch, a nearly 119,000-square-foot shopping center in Scottsdale, sells for $26.5 million, with a 94.8% occupancy rate at sale.
🏢 OFFICE
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Debt dilemma: Early-year increase in CMBS office debt payoffs masks deeper issues in commercial real estate, with Moody’s highlighting significant maturity challenges.
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Surrender: An SEC filing reveals that Empire State Realty Trust agrees to return First Stamford Place, a Connecticut office complex, to its lender, settling an outstanding foreclosure loan.
🏨 Hospitality
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Sales surge: Chick-fil-A's systemwide sales soared to $21.6 billion in 2023, edging closer to its more public fast-food competitors.
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Summer outlook: U.S. hoteliers face a cruel summer as the previous boost from leisure travel wanes, with trends showing a shift in travelers seeking destinations beyond the U.S.
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Family + Luxury: Hotel Bambinee, a luxury hotel brand tailored for young families, is launching in the U.S. by a seasoned hotel REIT executive. It offers family-centric amenities and design.
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Apartment rankings
Greystar Takes the Crown in Multifamily Housing
Greystar is now the largest apartment owner, developer and manager, according to the latest rankings from the National Multifamily Housing Council trade group. (CoStar)
Greystar has surged to the top of the U.S. apartment market, dethroning Mid-America Apartments (MAA) to become the largest apartment owner in the nation, according to the National Multifamily Housing Council (NMHC).
Endless expansion: The Charleston-based juggernaut expanded its dominion to 108,566 units through a mix of savvy acquisitions and aggressive development. In 2023 alone, Greystar embarked on the construction of 9,151 units, particularly focusing on the Sun Belt region, making it not just the biggest owner but also the top developer in the country. This expansion comes amid concerns over the rapid addition of new supply and decelerating rent growth in these areas.
A full sweep: Not stopping at development and ownership, Greystar has also clinched the title of the largest apartment manager, overseeing a remarkable 798,272 units by the end of 2023. A notable partnership with Wood Partners has further extended its management reach, pushing the total to over 895,000 units across approximately 3,200 communities.
Challenges ahead: While Greystar enjoys the limelight, MAA hasn't fallen far behind, holding the second spot with 100,894 units. However, it's adopting a more cautious approach by delaying new projects and capitalizing on discounted property prices in the Sun Belt. Other key players like Morgan Properties, Nuveen, and AvalonBay Communities remain close contenders, with Nuveen making a remarkable leap in the rankings.
➥ THE TAKEAWAY
Cautiously optimistic: NMHC's top 50 apartment owners manage 2.5 million units, 10% of U.S. stock, while its leading 50 managers handle 20%, over 4.7 million units. Despite economic and cost challenges, rental demand remains strong, indicating a need for 4.3 million new apartments by 2035. This forecasts a competitive but promising future for the multifamily housing market.
📈 CHART OF THE DAY
Dallas leads U.S. metro areas in financial job growth, driven by expanded corporate campuses from giants like Goldman Sachs and Wells Fargo, with suburbs Plano and Irving witnessing the highest surges, says JLL.
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