What the War In Ukraine Means for CRE Investments

Sanctions Imposed on Russia Raise Inflationary Risk

• The sanctions and financial lockdown of Russia will likely curtail Russian exports of oil, gas and metals
• Likely to result in higher prices for fuel and certain goods, placing upward pressure on inflation
• Real estates’ general inflation resistance mitigates major impacts, but inflation poses other economic risks

Large Levels of Uncertainty Surround the War

• Rising uncertainty may drive investors to safer investments, such as bonds and hard assets, like CRE
• Can place downward pressure on interest rates
• However, uncertainty may also slow investor decisions and actions; could weigh on CRE transaction activity

Commercial Real Estate Outlook Remains Positive

• A lot of unknowns remain on the extent and severity of the war, but the implications for CRE are limited
• Barring major escalations, commercial real estate remains well positioned with strong, underlying demand drivers

*Through January; 10-Year Treasury through March 02
Sources: Marcus & Millichap Research Services, Federal Reserve, BEA, BLS

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