2022 House View: North America Property Market Outlook


Will McIntosh, Ph.D
Global Head of Research

Jay Johnston
Senior Associate, Research

Mark Fitzgerald, CFA, CAIA
Executive Director, Research

Karen Martinus
Senior Associate, Research




January 2022

Executive Summary

We are pleased to present our 2022 House View for North America. This publication is produced each year and serves two essential purposes. First, it highlights our outlook for the U.S. economy and the commercial real estate (CRE) sector, as well as significant trends and opportunities. Secondly, it reasserts our investment stance before providing a forward-looking framework regarding our investment themes and strategies. Highlights from the report include:

  1.  The U.S. economy experienced a swift recovery in early 2021, after COVID-19 fueled the worst, but shortest, economic recession in history.
  2. Private real estate performed particularly well last year, driven substantially by historic compression of cap rates, but financial markets continue to evolve based on changing economic dynamics.
  3. Inflation has become a broader risk that is affecting consumer prices in addition to construction and input costs for CRE development, leading to higher replacement costs. Historically, private direct real estate has served as a strong hedge against inflation for investors.
  4. The combination of elevated federal debt and shifting demographics should continue to give rise to a yield starved environment and strengthen the case for increased allocations to CRE.
  5. Federal Reserve policy and associated bonds market pricing dynamics are finally setting the stage for interest rate hikes in the U.S.
  6. The pandemic served to reinforce and accelerate specific themes that we believe are emerging around the intersection of technology and real estate, as well as rental housing.