The Quarterly Real Estate Cycle Update

Market Cycles are very important to real estate investing. I do not know of a better person than Prof Glenn Mueller PhD who teaches at the Burns School of Real Estate and Construction Management, University of Denver and is the Academic Director for The Family Office Real Estate Institute (www.fore.institute) His Quarterly Market Monitor provides The Physical Market Cycle Analysis of 4 Property Types in 54 Metropolitan Statistical Areas (MSAs). READ BELOW

So Unique - GDP growth dropped 1.4% in 1Q22, yet the Federal Reserve still increased the Fed Funds rate by 0.5% instead of 0.25%, a jump they have not done in 20 years. Supply Chain pressure continued pushing prices up, and the labor market got even tighter, but wage growth did not keep up with the CPI. The stock market is repricing risk with a 20% decline YTD and short-term interest rates have jumped with 10-year treasury at 3+%. Add the oil shock and food prices increases to keep the economy slower. BUT – it is employment that drives demand for real estate and that demand (with 438,000 more jobs in April) is strong, pushing occupancies up in almost all cases.

Office occupancy decreased 0.1% in 1Q22, and rents increased 0.2% for the quarter but were down -0.7% annually. Industrial occupancy improved 0.2% in 1Q22, and rents grew 1.7% for the quarter and were up 7.4% annually. Apartment occupancy decreased 0.1% in 1Q22, and rents grew 2.5% for the quarter, and were up 4.2% annually.

Retail occupancy improved 0.2% In 1Q22, and rents grew 0.6% for the quarter and were up 1.9% annually.