SitusAMC Releases ValTrends Quarterly Report, “Capital Dislocation,” Showing Significant Drop in Transactions, Uncertainty About Values Among Investors

New York, NY – SitusAMC is pleased to announce the release of its latest quarterly research report, ValTrends, offering data-driven insights and analysis on valuation trends and space market fundamentals, as well as exclusive survey data on investor appetites for commercial real estate (CRE). The quarter's report, titled Capital Dislocation, examines how consecutive interest rate hikes by the Federal Reserve have left commercial real estate markets reeling, with a significant drop in transactions. That’s making it difficult to assess value, and uncertainty is driving investors to other asset classes.   

The report can be downloaded here: https://www.situsamc.com/valtrends1q23  

The report, authored by Peter Muoio, PhD, Head of SitusAMC Insights, and Jen Rasmussen, PhD, Vice President, SitusAMC Insights, includes extensive research, exclusive investor sentiment surveys, and proprietary research from 1Q 2023. The analysis offers a comprehensive view of the current state of commercial real estate valuations with a focus on:  

• Shifting Investor Allocations: The preference for CRE dropped for the fifth consecutive quarter to a record low as investors fretted about short-term economic uncertainty and declining values. Stocks were rated slightly lower due to market volatility, and the preference for bonds was the second highest since 2007, when this data began to be collected.  
    

• Capital Conditions: Capital availability trends are beginning to mirror those seen in the depths of the Global Financial Crisis. Equity capital availability remained unchanged in the first quarter, but was the lowest since at least 2014, when the survey first began tracking debt and equity separately. Debt availability declined to a record low. Between 65% and 75% of banks plan to deploy stricter underwriting for CRE loans. 
    

• Sector Preferences: Investors are still favoring apartments as the top CRE sector, but this preference fell substantially quarter over quarter to the lowest level since the onset of the pandemic. Office remained at the bottom of investor rankings, while the preference for retail soared to 31% from just 11% a year ago. 
     

"That's quite a substantial improvement," Muoio said, noting that multifamily is competing with industrial for the best sector. "Clearly investors perceive the office segment as the riskiest relative to return among property types, and the first-quarter rating was the lowest we've seen in history for office space. Investors believe office will continue to retrench as remote and hybrid work reduces office space usage in coming years." More than half of companies with U.S. offices plan to shrink their footprint over the next three years, the report noted. 

The report also provides an in-depth assessment performance data for the apartment, industrial, retail, office and hotel sectors, including total return, occupancy change, and rent growth, as well as (anonymized) commentary from institutional investors. It is designed to provide commercial real estate market participants with the actionable intelligence they need to make informed decisions for their investments and stay ahead of the curve.  

The release of this thought leadership report underscores SitusAMC’s commitment to powering the lifecycle of real estate finance. The analysis and insights provided in this report are invaluable to those seeking to stay informed and competitive in today's fast-paced business environment.  

The report can be downloaded here: https://www.situsamc.com/valtrends1q23  
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About SitusAMC  

SitusAMC (www.situsamc.com) is a leading independent provider of technology, strategic outsourcing, talent and advisory solutions to the commercial and residential real estate finance industries. The company helps clients identify and capture opportunities in their real estate businesses through industry-leading services and innovative technologies that drive operational efficiency, increase business effectiveness, and improve market agility across the entire lifecycle of their global real estate activity.  

Press Contact:  

Andy Garrett  
Head of Marketing  
andygarrett@situsamc.com