November 25, 2015
Real Capital Analytics (RCA) and Moody’s Analytics are now partnering to forecast commercial real estate indices over a 30-year horizon. Chief Economist at Moody’s, Mark Zandi, predicts that CRE gains will slow over the decade due to increased interest rates and supply.
The two firms say that coastal areas, which have been considered “gateway” markets, are waning in popularity due to low capitalization rates. Meanwhile, the cities of Atlanta, Chicago, and Jacksonville, along with some cities in Ohio are places where investors are trying to attract more yield. The firms say that Southeastern and Midwest markets are currently undervalued.
The indices that are used in the forecast from RCA and Moody’s deal with all of the major sectors of commercial real estate, including retail, offices, hotels and multifamily. Moody’s robust economic models take into account variables like spending, production, and employment, all the while having the ability to manipulate economic scenarios for predictions.