Executive Summary



Investment in domestic commercial real estate (CRE) has flourished during this economic recovery. However, the depth and breadth of this revival has varied widely. Since hitting bottom in late 2009, CRE construction, prices and investment have evolved. Certain areas of the country and their industries have thrived, surpassing their 2007 peaks. Other locations and sectors have struggled to recover to pre-recession levels.

Economic forces have not been the only driver shaping the CRE industry: technological advances have also played a major role. Innovation in big data has sparked the development of new investment vehicles that effectively use the growing array of economic, demographic, geographic, and industry level information available to measure and project the path of the real estate market. While these instruments generally move in tandem during periods of expansion and contraction, they often diverge during periods of uncertainty and market adjustment.

CRE markets appear to be entering a period of uncertainty. While the past decade was dominated by tailwinds, during which the recovery from financial crisis helped boost property fundamentals, values, and the supply and performance of commercial mortgages to historic levels. The market has entered a new phase in which headwinds have begun to push back. As the balance adjusts over the coming years the CRE industry will follow suit.

The information above focuses on the CRE market as a whole, but short and long term trends have varied widely across sectors. The variation in performance and risk, along with the relative size of the sectors drives the CRE market as a whole. This study examines socioeconomic and industry specific data and how it has evolved and transformed over time. It considers how trends in economic and financial markets, along with regulations and innovation, may influence the market for tools for commercial finance.

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