Investor preference for commercial real estate dropped to a record low in Q1, according to SitusAMC’s latest quarterly ValTrends research report. Stocks were rated slightly lower due to market volatility and the preference for bonds was the second highest since 2007 when data collection began. The report also found that capital availability trends are beginning to mirror those seen during the Global Financial Crisis, with equity capital availability remaining unchanged at its lowest level since 2014.
Apartments remain investors’ top CRE sector choice; however this preference fell substantially quarter over quarter and is now at its lowest level since pandemic onset. Office remained at the bottom of investor rankings while retail rose from 11% a year ago up to 31%.
Peter Muoio, head of SitusAMC Insights commented on these findings: “That’s quite a substantial improvement,” he said regarding retail preferences; “conversely investors perceive office space as riskiest relative return among property types with first-quarter ratings being historically low.” Investors believe office will continue retrenching as remote and hybrid work reduces usage in coming years
