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US commercial real estate outlook: The return of volatility

Read the latest research report from TIAA-CREF's research team on US commercial real estate.

Investors in US commercial real estate (CRE) have a lot to celebrate as results for 2014 are posted. According to the National Council of Real Estate Investment Fiduciaries (NCREIF), total return amounted to 11.8% for the year; it represented the fifth consecutive calendar year of double-digit performance. Prospects for 2015 are bright based on strengthening economic growth, solid job creation, low interest rates, declining vacancy rates, rising rents, and modest new construction. It bears recognizing, however, that 2015 would mark the sixth year of positive CRE performance after the Great Recession. That milestone means nothing in and of itself because cycles have no schedule; they do not expire and they do not die of old age. But, historically, all cycles have ended in a downturn.

In this report, TIAA-CREF review the splendid performance of US CRE through the recent recovery and examine the foundation for performance in the year ahead. As thoughtful real estate investors, TIAA-CREF look beyond the obvious metrics to factors that might eventually undermine property performance. Investors who recognize these vulnerabilities can adjust their decisions to benefit not only from the ongoing good times that are forecasted, but also from opportunity to hedge potential dangers that are lurking out of sight. 

Download the report