United States: Retail real estate returns to accelerate in the near term
US retail real estate returns are expected to accelerate this year, reaching 4.4%, despite growing geopolitical uncertainty, higher inflation, and quantitative tightening. While capital growth will be a key driver of near-term gains, solid income return levels will continue to stabilise the growth path over the five-year forecast period. That said, retail is projected to be the weakest-performing real estate sector in the US. Even so, returns for both direct and listed real estate should comfortably outpace those of bonds and equities.
What you will learn:
- Significant monetary policy tightening expected in the near term. We expect the Fed to raise the policy rate by a total of 175bps this year to rein in inflation.
- Retail yields are expected to soften over the near term. Retail yield compression during the pandemic was the result of a marked fall in income rather than a substantial rise in capital values.
- Retail returns will trail other real estate sectors. Retail returns are relatively weak when measured against past performance, forecasts for other sectors and retail performance elsewhere.
US Forecasting Service
Access to short- and long-term analysis, scenarios and forecasts for the US economy.Find Out More
Global Macro Service
Monitor macro events and their potential impact.Find Out More