Update on the Geography of the Apartment and Industrial Investment Cycles
As 2025 unfolds, US commercial real estate analysts are holding onto the view that the investment cycle is at bottom and offers attractive opportunity to acquire well-priced US properties. Well-discussed metrics supporting this view include the MSCI-RCA Commercial Property Pricing Index which is up 2% from its apparent cycle low in September 2024 and the NCREIF National Property Index which resumed positive total returns in Q3 2024 after seven quarters of negatives. The optimism is bolstered by the easing in interest rates initiated by the Federal Reserve in September along with the assumption that the macroeconomy and financial markets will provide solid growth and abundant credit despite Trump-2 volatility.
The cycle turn is welcome after the wild ride of the last few years. In 2020, property values edged down slightly as the COVID pandemic took hold. But the zero interest rates enacted by the Fed to fight the COVID recession were a boon to property investors. In addition, the industrial and apartment sectors benefited from pandemic-related shifts to online shopping and working from home.
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