By Simon Mallinson on January 4th, 2021
We kicked off last year in an upbeat-but-cautious mood, looking back on a generally fantastic decade for commercial real estate while also contemplating the challenges on the horizon. The biggest challenge of 2020, however, was yet to fully rear its ugly head until March.
And so it is that we look back on a selection of the most read RCA Insights stories of 2020 in chronological order, starting with the first big signs of trouble.
Normally, we’d say “happy reading” but 2020 was anything but normal, or happy. So instead we’ll say we hope you find this recap informative and useful. We look forward to providing our readers with more commentary and incisive analysis throughout 2021.
As lockdowns began, travel ceased, and offices emptied out, we took the temperature of the global commercial real estate markets. Asia Pacific was faring worst in mid-March but Europe and the Americas were holding up. That didn’t last. We published our final update of the Global Activity Tracker series on December 4.
The annual brokers report from Real Capital Analytics is always closely watched by the brokerage industry and the March 2020 edition was no different. With the shock to the market last year, the rankings for 2020 are sure to show a reshuffling. Watch out for this report coming in March 2021.
There is rampant fear out in the marketplace, wrote New York-based Senior Vice President Jim Costello, amid emergency moves by the Federal Reserve and central banks worldwide. We should hope for the best but be prepared for the worst, he concluded, words of wisdom that apply as much at the start of 2021 as they did back in March.
In one of our most read stories of 2020, Jim Costello analyzed the U.S. apartment market, asking what it would take to get to as sharp a decline in apartment values as that seen in the pricing of publicly-traded apartment companies.
Bob White, founder and CEO of Real Capital Analytics, penned the most-viewed RCA Insights article of 2020, explaining the stages of the distress cycle during and after the Global Financial Crisis (GFC). It’s a story we’ll revisit again and again in 2021 as the distress comes to the fore. As at the end of the third quarter of 2020, this was where the hurt was showing.
The hotel sector in the U.S. was already struggling. In this May update, we charted how the market had deteriorated. In June, London-based Senior Director of EMEA Analytics Tom Leahy took a global view of the troubled sector.
Anybody trying to implement a successful investment strategy using the distress playbook from the GFC is going to be disappointed, wrote Jim Costello of the U.S. market. CMBS, while a high-profile source of distress, is far from the only avenue for investors to seek distressed deals.
Nearing the midpoint of the year, RCA Director of Analytics Alexis Maltin surveyed the rate of collapsed commercial property deals globally. While media reports had highlighted the big busts for the year so far, RCA’s team was able to quantify the trend.
Investors of all stripes have a known tendency to sell winners and hold losers. In this July analysis, Tom Leahy and Senior Analyst Willem Vlaming used the RCA CPPI to examine how far prices would have to fall in global markets for owners to see their gains wiped out, and discussed the consequences for market liquidity.
In August, Singapore-based Senior Analyst Benjamin Chow charted the cross-border investors active in the Asia Pacific region during the first half of the year. Many investors stayed on the sidelines, but a handful of major players (including Blackstone, GIC and Allianz) bounded ahead of their typical investment outlays.
RCA’s Commercial Property Price Indices (RCA CPPI) are one of the most keenly watched metrics produced by the company. In October, New York-based Senior Analyst Wyatt Avery explained how stronger price signals in the industrial and apartment sectors were pushing the national index of commercial prices higher, despite dismal results for the retail market in particular.
Niche and alternative sector investment levels often proved more robust than the more conventional property sectors during the pandemic year. (Perhaps most prominently in Australia.) In this November story, Tom Leahy turned the spotlight on the life sciences sector. RCA’s expert authors also looked at data centers and student housing on RCA Insights during 2020.
After the second quarter, one RCA barometer of market liquidity indicated that the global situation was the poorest it had been since the GFC. In our update for the third quarter we telegraphed a change — for the worse.
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