Bill Alpert
Rental demand in commercial real estate is on the upswing, according to a recent survey of property-services firms.
William Blair analyst Stephen Sheldon has been surveying people involved in property leasing, sales and management, in every quarter for nearly five years. Demand for their services fell pretty steadily, starting in mid-2022.
But an upturn was reported by his respondents in the December 2023 quarter. A Wednesday note by Sheldon says that demand for real-estate services continued to rebound in the March 2024 quarter. Property sales transactions remain slow, but he expects them to pick up as the year progresses.
Sheldon therefore urges clients to accumulate shares of firms such as CBRE Group, Jones Lang LaSalle, Colliers International Group, and Cushman & Wakefield -- which provide sales, leasing, and management services for commercial properties.
"Sentiment in commercial-real-estate markets continues improving," writes the Blair analyst. "Dry powder targeting commercial-real-estate assets remains near all-time highs, and it seems likely that we have seen trough transactional volumes this cycle."
It's no secret that credit has been tight for commercial-property owners, and as long as interest rates remain high, plenty of people expect to see defaults increase as hundreds of billions of dollars worth of loans come up for refinancing.
Defaults won't necessarily be bad for the services firms that Sheldon follows, however, since distressed assets will need to be sold.
Maturing debt could serve as a catalyst for transactions, he says, and provide opportunities for well-capitalized investors in 2024.
Write to Bill Alpert at william.alpert@barrons.com
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(END) Dow Jones Newswires
April 17, 2024 14:48 ET (18:48 GMT)
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