US commercial real estate (CRE) investors are well-versed in the importance of economic growth to property investment performance. Focus on the Covid-19 recession, policies to truncate it, and the path of recovery have dominated the attention of analysts for more than two years. Macroeconomic factors continue to dominate attention now, well into 2022, as inflation in the Covid-recession’s aftermath complicated by Russia’s invasion into Ukraine have taken the spotlight. All eyes are now on the prospects for the US Federal Reserve (Fed) to accomplish a soft landing. Looking further ahead, US CRE will confront another challenge embodied in weakening demographics. In the paragraphs below, we identify the components of weakening demographics measured nationally and highlight differences across US metro areas. The differences illustrate the importance of careful metro market selection to counter demographic headwinds in the years ahead.
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