Multifamily housing: For the first time since the early pandemic days, the multifamily sector finds itself in a potentially challenging position. The macroeconomic environment has stayed difficult for consumers as well as developers and investors, while affordability in some of the markets that drove a significant amount of multifamily expansion has continued to decline.
Office: The first quarter illustrated that clarity around office users’ hybrid work schedules has not been enough to stabilize the office sector. Demand for rentable space, increasing vacancies and lukewarm rent growth continued to trend downward as the sector searches for ways to reposition traditional office properties, while creative investors are shifting capital toward more resilient office subsectors.
Retail: Retail remains less regarded by institutional money than multifamily and industrial, which is unlikely to change for some time. Whereas the multifamily and industrial sectors have deep fundamental tailwinds to provide some sense of certainty, retail has been defined recently by uncertainty and evolution.
Industrial: The industrial sector continues to generate enthusiasm among commercial real estate investors for its low vacancies, high rent growth and perceived safety in the midst of macroeconomic headwinds as a national recession looms.
Capital markets: REIT equity performance varied across sectors in the first quarter with industrial functioning substantially better than other sectors. All sectors other than industrial were down in March with large declines in office, retail and mortgage, pushing those sectors negative for the year.