BK Perspective Real Estate USA 2016

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Perspective on Real Estate 2016 - U.S. 475 Sansome Street 26 Building San | Francisco, Bentall Name, Kennedy CA (U.S.) City, Limited State Partnership Ownership
3 Capital Markets Capital Flows & Strong Fundamentals Drive Values Capital markets were steeped in “New Normal” or “low for long” economic conditions throughout 2015. Slow global growth, low inflation, low oil prices and geopolitical risks forced most central banks to stimulate. However, the Fed divergently scaled back its accommodative policies as the U.S. economy continued to progress toward full employment. As a result, a wall of capital has found its way to the U.S. in search of higher yields and a “safe haven.” During 2015, 10-year U.S. Treasury rates responded rapidly to market conditions introducing periods of short-term volatility (see Fig. 3.1). Declines followed the release of weak economic data while increases followed the announcement of stronger expectations, as well as potential Fed action. The 10-year U.S. Treasury traded generally in the 2.0% to 2.5%-range, well above most other sovereign debt levels, but this flight to quality kept U.S. Treasury rates very low. Global divergence in interest rates, however, has also strengthened the U.S. dollar relative to other currencies and introduced some short-term weakness in corporate earnings and raised stock market volatility. In light of this current low-yield and uncertain environment, global investors have been drawn into alternative asset classes, such as commercial real estate. Strong and improving fundamentals in the sector have supported income growth enabling direct equity real estate investors and lenders to achieve attractive yield spreads over risk-free rates. In addition, the heavy and persistent weight of investor capital into real estate has contributed to cap rate compression and property value appreciation. * 10 Day Moving Average Sources: Standard & Poor’s, U.S. Federal Reserve, Moody’s Analytics 10 Year Treasury Rate (%) 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 10 Year Treasury S&P 500 “A wall of capital has found its way to the U.S. in search of higher yields and a safe haven.” Fig. 3.1 Daily 10-Year Treasury Rate and S&P 500 Price Index 2,200 2,100 2,000 1,900 1,800 1,700 1,600 1,500 1,400 1,300 1,200 02 04 06 08 10 12 02 04 06 08 10 12 02 04 06 08 10 12 13 13 13 13 13 13 14 14 14 14 14 14 15 15 15 15 15 15 S&P 500 Price Index* Bentall Kennedy (U.S.) Limited Partnership | 27
Page 1 and 2: 2016 PERSPECTIVE ON REAL ESTATE | U
Page 3 and 4: Contents Chapter 1 Executive Overvi
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Page 9 and 10: 1 Executive Overview 600 California
Page 11 and 12: Economic Outlook2 Global Economy: D
Page 13 and 14: Economic Outlook2 as emerging and d
Page 15 and 16: Economic Outlook2 GDP growth was no
Page 17 and 18: Economic Outlook2 education with in
Page 19 and 20: Economic Outlook2 by sequestration,
Page 21 and 22: Economic Outlook2 Figure 2.10 shows
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Page 29 and 30: 3 Capital Markets Foreign investors
Page 31 and 32: 3 Capital Markets the same 12-month
Page 33 and 34: 4 Property Sector Fundamentals Tigh
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Page 41 and 42: 4 Property Sector Fundamentals more
Page 43 and 44: 4 Property Sector Fundamentals Medi
Page 45 and 46: 4 Property Sector Fundamentals Mean
Page 47 and 48: 4 Property Sector Fundamentals 2015
Page 49 and 50: 4 Property Sector Fundamentals grow
Page 51 and 52: 4 Property Sector Fundamentals Fig.
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Page 55 and 56: Perspective on Real Estate 2014 - C

BK Perspective Real Estate USA 2016

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