Despite positive sentiment, there is still some lingering uncertainty in the market. Nearly half of respondents (49 percent) do not believe the worst of the economic downturn is behind us, while 30 percent think the worst is behind us and 21 percent were unsure. That shows a notable shift compared to both of the 2021 surveys, where more survey respondents thought the worst was behind us at 45 percent in the second half and 40 percent in the first-half 2021 surveys. Sentiment is more on par with the early days of the pandemic, where half of respondents did not believe the worst of the pandemic was behind us. “That result is surprising, but I think people have been trained to become paranoid,” notes Chang. People thought the pandemic was nearing an end, then the delta variant hit and then came omicron. “So, people may be waiting for the other shoe to drop, and that hesitancy is coloring the survey response there,” he says.
The reality is that there are still uncertainties and risks related to COVID-19, geopolitical issues, inflation and rising interest rates. Despite those headwinds, the U.S. remains on track for positive economic growth in both 2022 and 2023. Contributing to the economic momentum are factors such as strong household formation, high levels of consumer savings and a return to more typical pre-pandemic behavior that will result in people returning to the office and spending on travel, entertainment, dining and shopping.
Combined, those factors are positive for all types of commercial real estate, and the availability of capital and positive performance outlook across almost every property type is likely to continue to drive investor demand to acquire assets, notes Chang. “The perception that there is greater safety in commercial real estate as compared to other asset classes, is going to work in favor of new capital moving into this space, and it will also make it more competitive,” he says. “At the end of the day, commercial real estate is poised to perform very well in 2022 and beyond.”