Market outlook 2022 is a very interesting time to be involved with commercial real estate. There are many factors that will determine how the market performs. One of these is the rate of growth in logistics real estate in the U.S., and the other is Policy guidance from Wall Street. In addition, there are many Carbon markets to keep an eye on, and a lot of oil prices to consider.
The outlook for oil prices is far from rosy. With the US economy expected to slow and global growth slowing, a recession may be on the horizon. This will lead to a reduced demand for oil.
OPEC and non-OPEC countries are limiting oil production. These constraints are driving prices up. However, the market is still volatile. Despite these challenges, prices are forecast to remain above the five-year average of $60/b. Moreover, the US government is an active buyer of oil.
Global supply is predicted to decline by one million barrels per day in the coming year. Combined with supply challenges, this should have a positive impact on the market. OPEC+ will gradually increase oil output in the next couple of years.
The Carbon markets outlook 2022 provides an analysis of global carbon markets. It also covers the latest trends, key issues and health measures, as well as the role of financial institutions.
The report focuses on five countries and the carbon markets in each. Its main focus is on voluntary offset exchanges, with a detailed overview of the Blue-Sky Thinking project and the global climate policy landscape.
The carbon credit market is expected to reach $211.5 billion in 2019, and will continue to grow at an average rate of 31% a year through 2027. According to the report, the highest-growth sector is forestry. In the forestry sector, a large number of non-profit organizations are using carbon offsets to promote their climate goals.
3PL leasing activity
The third-party logistics (3PL) industry continues to drive leasing activity in the U.S., according to JLL's Industrial Research Team. This sector accounted for more than 28% of leasing activity in the third quarter of 2022. Its continued growth is largely driven by the demand from stakeholders in the supply chain.
While the overall economy is expected to slow down this year, leasing activity is projected to remain strong in the logistics sector. Low vacancy rates are fueling significant development nationwide. However, economic uncertainty, inflationary pressures, and rising interest rates pose downside risks.
In the first half of 2022, I&L segment leasing activity was stable. It recorded 9.2 million square feet of absorption. Leasing activity in the I&L sector grew 18% in Q3.
Third-party logistics providers continue to play a major role in warehouse space expansion plans. They help customers realize the cost savings and service level improvements that modern logistics facilities can provide. Although the economic slowdown is set to affect their business, these companies plan to continue expanding in 2022 and beyond. Approximately 81% of these companies plan to expand their real estate footprint over the next three years.
Growth in logistics real estate in the U.S.
Logistics real estate is a sector of commercial real estate that responds to the needs of logistics providers. It involves large storage areas, warehouses, and other buildings that facilitate the storage, shipping, and handling of goods.
The logistics real estate industry has experienced a significant spike in growth since the recent economic crisis. Increased e-commerce demand has boosted demand for warehouse space. These factors are now driving rents to rise.
Industrial real estate is becoming a focus of institutional investors. As the industrial property sector continues to grow, these players are aiming to allocate more industrial real estate to the market. However, the cost of capital may limit new supply.
In addition, the logistics real estate sector will have to address issues like sustainability, governance, and environmental concerns. Those factors will be a key factor in the future of the industry.
Policy guidance from Wall Street
The Federal Reserve and other central banks are expected to begin easing rates in some of their core economies in the coming years. This will put some pressure on inflation in the coming years. Nevertheless, the easing of interest rates is expected to result in a sustained recovery of asset prices.
As we enter the new year, many analysts and investors are looking to the Fed and other central banks for guidance on the market outlook for 2022. Although these policies can influence markets, there are other factors that are important for investors.
One key indicator is the inverted yield curve. An inverted curve is a sign that the interest rate is below the level of the nominal value of the underlying security. For example, a 30-year fixed-rate mortgage might have a yield of 4%, but an inverted yield curve suggests that the rate could be closer to 5%.