Inflation Fears are Driving More Investors Towards Commercial Real Estate
November 8, 2021 | Beth Mattson-Teig | WealthManagement.com
Inflation appears to be providing another tailwind for investors looking to increase allocations to commercial real estate. But is the promise of commercial real estate as an inflation hedge all it’s cracked up to be?
According to Bureau of Labor Statistics estimates, the consumer price index rose 5.4 percent in September, the fifth straight month in which the inflation rate was five percent or greater. Views remain mixed on whether higher inflation could be transitory—caused by a combination of reopening economy and a choked supply chain—or whether more long-term inflationary pressures are at play.
“I think it is transitory, but inflation could be stickier than people think and continue into 2022,” says Richard Barkham, PhD, global chief economist, head of global research and head of Americas Research at CBRE. Barkham expects inflation to drop back once some of the supply side issues contributing to price increases improve as more people return to the workforce.
