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CBRE strategist says commercial real estate is in ‘controlled turbulence’

Bisnow reports that CBRE says investors are shifting cities and asset types, with some moving from core properties to core-plus or value-add as funding tightens at the top end.

Reported · Written up by our desk · Industry

Bisnow says its annual halftime report surveyed commercial real estate leaders on conditions at the end of the second quarter, and responses ranged from staying on the sidelines to actively moving, suggesting the industry remains split between cautious optimism and caution. CBRE Global Client Strategist Spencer Levy told Bisnow that macro noise has persisted in real estate since the pandemic, but he believes the sector has been able to adjust, particularly as interest rates have evolved.

Levy said the adjustment is now showing up in strategy changes, including reallocations by well-funded investors who are altering both asset types and city targets. According to Bisnow, Levy pointed to the financing environment as a key driver, saying that raising capital is difficult in the highest end of the market when returns are comparable to bonds but with more risk, pushing some investors to shift from core to core-plus or value-add.

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