The Most Favorable Real Estate Sectors for the Next Five Years

As the commercial real estate recovery takes shape, not all real estate sectors are likely to rebound the same. This month’s chart, courtesy of CBRE, presents their income and total return forecast for various sectors with Bluerock high conviction sectors on the left. The columns’ lower portion illustrates the income return projection, the higher portion of the stacked column shows the projected capital return, and the dot reflecting each sector’s projected total return. These sectors, including industrial, residential, and specialty sectors such as life sciences, medical offices, and self-storage are projected to generate some of the highest returns of all sectors. We believe these projections reflect the fundamentals and structural demand drivers that we also see in these high conviction sectors. Industrial space, driven by the growth of e-commerce, faster delivery times, and widespread below market rents, is poised for a bright future. The residential sector, including apartments and single-family rentals, is also well positioned with an overall lack of supply of housing, new household formations, and a significant discount to home ownership. The health care sector, including life sciences and medical offices, should also benefit from favorable demographic trends and advances in medicines and treatments.

Source: CBRE Investment Management, forecasts as of Q4 2023. For illustrative purposes only. Based on CBRE Investment Management’s subjective views and subject to change.

There can be no assurance any targets or business initiatives will occur as expected. Forecasts are inherently uncertain and subject to change.

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