Piermont

Global supply chain pressure continuous due to various geopolitical issues. Last week we collaborated with the Federal Reserve Bank of New York regarding the Global Supply Chain Pressure Index (GSCPI) and the correlation to US Industrial development and net absorption for our upcoming Macroeconomics report. Here is our Macro QuickTake:

Real gross domestic product (GDP) increased at an annual rate of 2.8 percent in the second quarter of 2024, according to the "advance" estimate. Inflation moderated in the second quarter and the job market has continued softening, factors that could encourage the Fed to cut interest rates in the coming months. Excessive numbers of investors across the global real estate markets have waited for rate cuts to balance returns specifically for allocation of capital into core and core-plus funds. More insight here in our Capital Markets Briefing, below.

The Piermont team is looking forward to another Groundbreakers event in October. Thank you to Prologis for hosting this upcoming highly innovative and informative thought leadership forum. https://lnkd.in/eEbjvffY

That's a wrap, H1! In one of our upcoming H2 market reports, we cover the current economic trends and challenges U.S. Ports face as onshoring, nearshoring, and friendshoring initiatives continue to develop, overcoming growing geopolitical tensions. U.S. Ports currently face further challenges including labor shortages, limited terminal capacity, aging infrastructure, and environmental factors ranging from ongoing drought in the Panama Canal and conflicts in the Middle East causing shipping delays and rerouting, adding to transit times and deliverability of goods to consumers. Although decelerating, logistics costs are still relatively high compared to the pre-pandemic baseline and the ratio of business logistics costs to nominal U.S. GDP. Stay tuned for this market analysis and report.

As we approach the final days of both Q2 & H1, a total of $75.74 billion of CMBS loans against office properties mature by the end of 2025, more than half of the $135 billion of all CMBS loans that were slated to mature this year and next. Meanwhile, $1.08 trillion of the total $5.54 trillion universe of commercial real estate loans come due this year and next. The 10-year Treasury rate, against which most long-term mortgages are benchmarked, is now 4.44%. It ended 2014 at 2.17% and spent just about the entire year in the sub-3% range. Download our CMBS report for more insight:

As we entered the last month of Q2, market momentum has been gaining positive traction as real estate is fairly priced vs. corporate bonds, cap rates expected to hold steady and property pricing has stabilized this year; pricing in most sectors is circa 20% below its 2022 peak before interest rate hikes. CRE pricing is unlikely to change much over the near term assuming bond yields don't jump or fall. Here is our Capital Markets Quick Take Briefing:

A preview to our Q2 Market Report on data centers and the positive impact on global supply chains. Data centers are expected to accelerate at a compound annual growth rate of 11.8% during 2024–2028. The global supply chain is battling heightened expectations, geopolitical uncertainty, and economic volatility. Our report covers a wide range of topics, including how data usage in the supply chain is evolving, the significance of new global supply chain models, adapting to constantly changing regulations, and much more.

The world's data volume is expanding quickly predicted to produce 1.5 times as much digital data in 2024 as it did in just the previous two years. Within our upcoming Q2 report we discuss how data centers serve a key role in global supply chains as the digital hubs that underpin the interconnectedness of the modern world, enabling people to communicate, collaborate, and access information on a global scale.

Within our Q1 CMBS Market Report, we expect the overall CMBS property yields will remain elevated in 2024, roughly $14.7 billion in SASB CMBS carries yield less than 8% and faces greater challenges to refinancing. Moody's expects transaction levels to remain low, matching 2021 levels, as wide bid-ask spreads between buyers and sellers have led to lower sales prices. Download our CMBS report for more insight: