Edward F. Pierzak

In the third quarter of 2022, the FTSE Nareit All Equity Index and NCREIF Fund Index–Open End Diversified Core Equity posted rolling four-quarter total returns of -16.3% and 22.1%, respectively.

The U.S. economy has been marked by mixed economic growth results, elevated inflation, and higher interest rates.

The U.S. commercial real estate market is amid an uncoupling. Property operational performance has generally been strong for both public and private real estate, but valuation metrics and total returns have diverged.

With mixed economic growth results, waning job gains, increasing interest rates, and rising recession risk, the U.S. economy is facing numerous headwinds.

After experiencing two consecutive quarters of negative growth in the first half of 2022, U.S. real GDP grew by 2.6% in the third quarter this year.

With inflation remaining at 40-year highs, interest rates escalating, and economic growth contracting, the U.S. economy is in a precarious state.

The average office occupancy rate rose almost 4% in the week after the holiday.

Recent data from CoStar highlight some of the supply and demand differences across sectors. In the second quarter of 2022, demand continued to outstrip supply for both industrial and retail, while apartment and office demand fell short of their respective supply counterparts.

The U.S. economy has faced numerous headwinds over the last few years.

In the second quarter of 2022, continued solid fundamentals reflect an ongoing healthy demand for commercial real estate across most sectors, even as concerns about a slowing economy dominate the outlook.