What Would a Recession Mean for CRE Investors?

No Consensus on Timing of Next Recession

• Robust job gains, strong wage growth and steady retail sales suggest steady growth outlook
• However, exorbitant inflation, rising rates and falling stocks could slow spending, inducing a recession

How Severe Could the Next Recession Be?

• Both Health Crisis and Financial Crisis recessions hit economy and CRE hard, unlikely to happen again
• Recessions in 1981 and 1990 most comparable; preceded by high inflation and strong Fed action
• Full impact varies greatly by location and asset type

CRE Has Performed Well Through Most Recessions

• Returns for all property types softened in the 80’s, dipped negative in ‘91; Apartment saw the smallest declines
• Retail and Office experienced substantial downward pressure, followed by strong, steady growth
• Industrial had similar impact, but returns have outperformed in last few years

*Through 1Q
Trailing 12-month average; Includes Apartment, Retail, Office, Industrial, and Hotel properties
Sources: Marcus & Millichap Research Services, NCREIF

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