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Market Analysis <br />25 <br /> <br />spreads and higher overall rates. Adequate capital still exists from banks, life companies <br />and the GSEs, while the CMBS market remains in recovery mode and debt funds vary <br />depending on their capital sources. <br /> In addition to market uncertainty, government, company and individual social distancing <br />mandates may impact property inspections resulting in extended due diligence periods. <br /> A bounce back is already being seen in Asia Pacific. In China, consumption continued to <br />rebound in Q2, supported by a spike in “revenge spending” by shoppers emerging from <br />lockdown. <br /> A post-pandemic reality will emphasize public safety, technology, and optimizing human <br />capital. <br />MACROECONOMIC CONCLUSIONS <br />Initially, market participants were expecting a rebound between the second half of 2020 and first <br />half of 2021. However, due to increased cases following initial reopening efforts in Q2 2020, <br />recovery for the US economy has lost momentum; resulting in a potentially prolonged recovery <br />timeline. The pace of the recovery will depend in large part on containment of the pandemic, <br />timing of vaccine or other medical solutions, mandated restrictions and policy responses. <br />Unemployment has continued to improve from its April highs, however, the gap between current <br />and pre-pandemic levels is still immense. Fiscal and monetary supply for the economy have been <br />unprecedented and, together with pent-up demand, are expected to enable a relatively sustained <br />return to normalcy once health-oriented concerns are alleviated. If a second wave of the virus can <br />be managed effectively, high rates of growth can be expected in 2021. A "V" shaped recovery is <br />broadly anticipated for the broad economy, whereas real estate is likely to lag somewhat with a <br />“swoosh” shaped recovery expected. There will be short term disruptions that will impact rent <br />collections, near-term vacancies, rent growth, and lease-up across most property types. The <br />impact and recovery will vary by city and by property type. Overall, market participants are <br />indicating a pause across most sale and lease transactions as buyers and tenants continue to <br />navigate this period of uncertainty.