Retail Continues Negative Outlook While New York City Multifamily Market Expected to Deliver Strong Returns

The latest RICS Commercial Property Monitor for 2019 Q4, produced in partnership with the Association of Foreign Investors in Real Estate(AFIRE) and focused on commercial property in the U.S., suggests an overall more positive outlook on the real estate market among occupiers and investors compared to Q3. The improvement is being driven by strong readings for the industrial and logistics sector with a modest uplift in the feedback around offices; the negative mood around particularly secondary market retailspace shows little sign of easing.

Investor and occupier sentiment in the U.S.is up, as only 17 percent of U.S. respondents indicated that they viewed their market as being in a downturn phase or at the bottom of the real estate cycle, down from 35 percent in Q3.

On a city level, New York City is seeing a positive outlook, particularly as the multifamily market is expected to deliver strong returns, with capital valuesprojected to rise bymore than three percent supported by further gains in rental values, despite the implementation of curbing landlords flexibility in this area. In Toronto, the industrial and logistics sector is leading the charge, aided by a lack of availability of good quality and well-located spaces.

“What we’re seeing is the benefits of stability,” said Neil Shah, Managing Director for RICS in the Americas. “The now-inevitability of Brexit is causing international investors to deploy capital to the U.K. because they know more about what to expect. Similarly, with the new multifamily landscape in New York, investors will adjust to the new regulations and we expect to see increased activity compared to most of 2019.”

In addition to the U.K., the U.S. and Japan were heavily cited as targets for international investment.In a separate set of questions put specifically to members of AFIRE, who represent approximately $3 trillion AUM, Asia continues to be viewed positively as a destination for the deployment of international capital with Japan identified as a particular beneficiary.

RICS U.S. and Global Commercial Property Monitors are a quarterly guide to the trends in the commercial property investment and occupier markets.Survey questionnaires opened on December9, 2019 and closed onJanuary 13,2020. Respondentswere asked to compare conditions over the latest three monthswith the previous three months, as well as their views on the overall market outlook. The full U.S. and global Q3reports are available from the RICS website at www.rics.org/economics, along with other surveys covering the housing market, residential lettings, commercial property, construction activity and the rural land market.

About RICS

We are RICS. Everything we do is designed to effect positive change in the built and natural environments.

Through our respected global standards, leading professional progression and our trusted data and insights, we promote and enforce the highest professional standards in the development and management of land, real estate, construction and infrastructure.

Our work with others provides a foundation for confident markets, pioneers better places to live and work and is a force for positive social impact. www.rics.org

About AFIRE

AFIRE is the association for international real estate investors focused on commercial property in the United States.Established in 1988, AFIRE is an essential forum for real estate investment thought leadership, with a global membership includingmore than 200 organizations representing approximately $3 trillion in assets under management. Its members gather throughout the year to help each other become Better Investors, Better Leaders and Better Global Citizens through conferences, research, publications, research and analysis of real estate capital markets, cross-border issues, policy, economics, technology and management. www.afire.org