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OUR COMPANY AFFILIATES

CBRE GROUP

CBRE Group, Inc. is the world’s largest commercial real estate services and investment firm, with 2018 revenues of $21.3 billion and more than 90,000 employees (excluding affiliate offices). CBRE has been included in the Fortune 500 since 2008, ranking #146 in 2019. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.

INVESTMENT SERVICES

CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers with $106 billion in assets under management.

Built up over more than 40 years, our unparalleled platform is focused on real assets, giving our institutional clients access to real estate and infrastructure in the Americas, Europe and Asia Pacific. Our clients benefit from a complete range of investment solutions including equity and debt, direct and indirect, and listed and unlisted strategies.

Trammell Crow Company, founded in Dallas, Texas in 1948, is one of the nation’s oldest and most prolific developers of, and investors in, commercial real estate.The CBRE Global Investors and Trammell Crow Company platforms make up the Real Estate Investments division of CBRE Group.

The Real Estate Investments division is led by
Mike Lafitte, Global CEO, Real Estate Investments.

BLOGS

Regularly released content on the state of the real estate and infrastructure industry are produced by our subject matter experts and shared on their blogs. A selection of them can be found below.

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U.S. EARLY INDICATORS

Q1 2020
GROWTH PERSISTS
RELATIVE VALUE

Although cap rates are near record-lows, real estate remains attractively priced relative to fixed income alternatives, as the cap rate-to-corporate bond yield ratio trended upwards in response to declining corporate bond yields through 2019. Fueled by healthy property market fundamentals, as well as declining debt costs, transaction volumes remained buoyant, with total individual-asset sales in 4Q19 reaching its highest quarterly total on record, according to Real Capital Analytics.

Sources: Oxford Economics, NCREIF, Green Street, Real Capital Analytics
STRONG PERFORMANCE

Strong property fundamentals and an accommodative capital markets environment fueled healthy listed and private real estate returns. In 2019, REIT total returns fell just short of returns for the S&P 500 index, at 28.7% and 32.0%, respectively. The REIT sector’s strong performance was fueled by the strength of the industrial sector, which overshadowed the retail sector’s lackluster showing. Driven largely by steady income returns, private, unlevered total returns slowed modestly in comparison to last year, easing to 6.4%.

Sources: NCREIF; NAREIT. Both indices rebased to 100 on June 30, 2006
CURVE BALL

The Coronavirus has raised fears among investors, leading many to flee to the safety of U.S. Treasuries, placing downward pressure on long-term yields through early 2020 and prompting yet another yield curve inversion. The influence of global markets on long-term treasury yields, the distortion caused by quantitative easing, and the lack of inflationary pressure have raised concerns regarding the yield curve’s predictive power. Nonetheless, the inverted yield curve reflects growing concerns regarding the health of the global economy and may contribute to further slowing as lending is disincentivized.

Source: Federal Reserve
WANING OPTIMISM

Although still positive, growth in the Leading Economic Index (LEI) continued to decelerate through the final months of 2019, rising by just 0.1% y-o-y% in December 2019. Recent weakness was fueled by a rise in unemployment claims and a decline in housing permits. With the index at a plateau, this deceleration should be monitored, as an annual decline in the index preceded each of the previous six recessions.

Source: The Conference Board Index is comprised of ten economic indicators, including average production work week, initial unemployment claims, manufacturers new orders, vendor performance, supplier deliveries, building permits, stock prices, money supply, consumer expectations, and interest rate spreads.
LABOR MARKET REMAINS TIGHT

The U.S. economy grew by more than 2 million jobs in 2019 – an eighth consecutive year of job creation exceeding 2 million jobs. With the U.S. economy maintaining an above average growth rate through 2019, the unemployment rate continued to edge downward through the final months of the year, falling to 3.5% to close out 2019 and remaining at multi-generational lows.

Source: BEA
PRINCIPAL CONTRIBUTOR:
 
Jeremiah Lee
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Please note that the content of this report is for informational purposes only and should not be viewed as investment advice or an offer or solicitation. Any opinions are solely those of the Strategy & Research Team of CBRE Global Investors and are subject to change without notice, and may not be consistent with market trends or future events. This research is based on current public information that we consider reliable, but we do not represent it as accurate, updated or complete, and it should not be relied on as such.

Copyright © 2019, CBRE Global Investors, LLC. All rights reserved.