Commercial Real Estate bidding Activity Shows signs of rebound
After a period of hesitation earlier in the year, driven by broader economic concerns, the commercial real estate market is demonstrating renewed activity. A recent report from JLL indicates a stabilization – and even advancement – in bidding dynamics, marking the first positive shift since December.
JLL’s global Bid Intensity Index, a key indicator of liquidity and competitiveness in private real estate capital markets, points to increasing capital flow and a more balanced playing field for buyers and sellers. The index is built upon three core components: the gap between final bid and asking price (Bid-Ask Spread),the average number of bids received per property (Bids per deal),and the variation in pricing among final bids (Bid Variability).
this stabilization coincides with a period of relative strength in property sector fundamentals and a surprising resilience in asset valuations.despite ongoing investor caution,property values have largely held steady throughout the year.
“Institutional investors are returning to the market with increased capital and a renewed appetite for real estate,” notes Ben Breslau, Chief Research Officer at JLL. “while a full recovery is expected to be gradual, the stabilization of borrowing costs and property values in many markets suggests momentum will build throughout the remainder of the year.”
Sector performance Varies
The report highlights varying performance across different property sectors. “living” - encompassing multifamily apartments, senior living, and student housing - is leading the charge, with bid-ask spreads narrowing considerably. Retail is showing improvement compared to last year, though recent months have seen a slight decline due to the impact of tariffs.
Industrial properties, though, are lagging, hampered by ongoing supply chain disruptions and the uncertainty surrounding potential and implemented tariffs.
Interestingly, the office market is also showing signs of life.Increased bidder participation and a growing number of lenders offering financing are contributing to improved bid dynamics. Some analysts are even suggesting the office market may be nearing a bottom after the notable downturn experienced during the COVID-19 pandemic,with investors actively seeking opportunities and demand rising alongside the return-to-office trend.
Accepting Uncertainty, Embracing Risk
The JLL report suggests investors are increasingly accepting uncertainty as a permanent feature of the market landscape. This acceptance extends to a willingness to embrace higher levels of risk.
Breslau emphasizes the enduring appeal of commercial real estate as a long-term investment. “The attractiveness of CRE as a store of value remains intact,” he states. “As investors shift towards a ‘risk-on’ approach, combined with the strength of current debt markets, we anticipate continued growth in capital flows into the sector.”
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