The Current Commercial Real Estate Picture

September 19, 2011

The NCREIF Property Index’s (“NPI”) second-quarter return of 3.94% was the sixth straight quarter of positive performance and the second strongest quarter of performance since the downturn beginning in September of 2007. While property income level has slowly risen, fluctuating in the 1.25% to 1.70% range per quarter, appreciation of property values has been the primary catalyst of real estate’s positive return. Spurring the underlying property value appreciation is the transaction volume increase, up 132% year-over-year, coupled with cap rate compression.
year£, coupled with cap rate2 compression.

Given the upward trajectory of real estate values, investors have started to wonder if the recovery has gotten ahead of itself, and which segments of the market offer the best opportunities for future returns. In the following, we assess the current recovery as well as future opportunities.

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The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

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This chart description is for illustrative purposes only and its accuracy cannot be guaranteed. Please see full disclosures at end of PDF document in the web post. General description: Five-line chart displaying commercial real estate transaction volume in recent years. Chart subtitle: Record low transaction activity has led to pricing opaqueness in the market for commercial real estate. Chart source: RCI, MSCI, AEW Global Real Estate Investment as of December 31, 2023. Chart visual description: Y-axis labeled “Month Over Month Cumulative Transaction Volume,” and ranges from $0B to $1,000B. X-axis is labeled by month. 2019 data plotted in blue line; 2020 in slate; 2021 in purple; 2022 in green, 2023 in orange. Chart data description: Please contact us for the full dataset. Each year’s end total: 2019 $610B, 2020 $440B, 2021 $881B, 2022 $764B, 2023 $369. End chart description. See disclosures at end of document.


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