seven key commercial real estate investment themes for 2016
TRANSCRIPT
Seven key commercial real estate investment themes for 2016U.S. Investment Outlook Q1 2016
Sectors at a glanceEffects of recent capital markets volatility were felt in early 2016
3
1.After a bumpy January and February spur heightened caution in markets, signs of stability emerged late in Q1
4
Volatility in the public markets drops after a bumpy six months
Source: JLL Research, CBOE, Bloomberg (data as of 4/6/16)
5
2.CMBS pricing follows the wave of market volatility with recent signs of needed stability
6
CMBS issuance takes a hit with market volatility
Source: JLL Research, Bloomberg, Commercial Mortgage Alert (through 3/31/16)
Equity market volatility causes gradual increase in CMBS spreads
Source: JLL Research, Commercial Mortgage Alert (through 4/1/16)
7
3.Capital deployment pressures heighten with increased caution, decline in deal flow and continued discipline
8
Following three elevated years, fundraising slowing in 2016
Source: JLL Research, Preqin (Data includes North American closed funds as of 4/12/16)
Record levels of global dry powder in the markets
Source: JLL Research, Preqin (Global data is an aggregate of historic closed funds as of 4/1/16)
9
4.Slow start to 2016 in debt and equity markets parallels cautious investor sentiment
10
Heightened sensitivity to risk spurs early slowdown in 2016
Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m; Includes portfolio, entity-level transactions)
Excluding multifamily, slow start felt across sectors
Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m; Includes portfolio, entity-level transactions)
11
5.Meeting the gap: REIT performance pressures benefitting dry powder in markets
12
REIT disposition efforts benefitting dry powder in markets
Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m; Excludes hotels)
Hote
ls
Mul
tifam
ily
Offic
e
Reta
il
Indu
strial
Over
all
81.3%
57.8%
34.5%
15.2% 10.7%
38.0%
14.5%
21.0%20.9%
21.6%
20.3% 20.5%
4.2%15.1%
13.6%30.7% 14.4%
17.6%
6.0%
25.3%
31.6%47.1%
21.3%
5.7% 7.6%
Other
Public
Private
Institutional investors / SWFs
Private equity / Investment funds
Acqu
irers
of R
EIT
prod
uct,
2015
– Q
1 20
16
13
6.Cross-border investment is down, but far from diminished
14
Cross-border investment normalizing in 2016
Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m)
Where is the capital focused? Q1 sees a shift from industrial back to office product
Source: JLL Research, Real Capital Analytics (Transactions larger than $5.0m)
15
7.Fear factor remains despite market rebound and lower volatility
16
Fear Barometer reflecting concern of a market sell off
Source: JLL Research, Credit Suisse, CBOE, Bloomberg (data as of April 12, 2016)
Jan-
15
Feb-
15
Mar
-15
Apr-1
5
May
-15
Jun-
15
Jul-1
5
Aug-
15
Sep-
15
Oct-1
5
Nov-
15
Dec-
15
Jan-
16
Feb-
16
Mar
-16
Apr-1
610
15
20
25
30
35
40
45
50
55
60
Fear Barometer Volatility Index
17
U.S. investment themes Learn more about these Q1 2016 trends, plus read sector-specific takeaways for office, industrial, lodging and others.
Download JLL’s latest U.S. Investment Outlook
www.us.jll.com/investment-outlook