Next Season's Meager Harvest In Commercial Real Estate

Next Season’s Meager Harvest In Commercial Real Estate by Michael Aked, Jim Masturzo – Research Affiliates

I made hay while the sun shone.

My work sold.

Now, if the harvest is over

And the world cold,

Give me the bonus of laughter

As I lose hold.

— “The Last Laugh” by John Betjeman

Key Points

• Investing when prices are low and reinvesting to maintain (and upgrade) value are both necessary requisites for successful property investment. Changing fundamentals, such as new construction spend and the vacancy rate, also impact commercial property investments’ real return.
• Over the last 5 years, US commercial property investors have earned a real return of nearly 10% a year, surpassing the returns of the previous three decades. We estimate a much lower real...
  

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