Both experienced and new investors are chasing the same thing, real and dependable returns that can beat the threat of inflation. With the increase of trillions of dollars in our money supply and inflation currently hovering at 6% this year, the trend continues to threaten the value of our dollars. This, compounded with the volatility of the stock market, pushes investors to consider other asset classes.

Evidence

Marcus and Millichap just released a very informative video that describes the trend of the rush to real assets. Aside from office, all areas of real estate have increased in transaction volume since 2019, pre-COVID. Full video here.

Self-Storage – 56%
Hotel – 46%
Industrial – 17.4%
Apartment – 15.4%
Retail – 17.9%
Office – (4.6%)
Medical Office – 12%

Bottom line: Sales velocity has surged this year!

The Rush To Real Assets

So what is driving the large volumes of commercial real estate investments? According to Marcus and Millichap, some of this years activity is driven by last year’s activity that was placed on hold.

More significantly, however, is the effect of the increase in our money supply which is 28% higher than pre-pandemic levels! More money means more inflation. More inflation means a need for higher returns to beat inflation. Investors want to protect their money and not suffer from the craziness of the stock roller coaster. So they make the wise choice to invest in the proven, timeless asset class known to beat inflation. And that is commercial real estate.

The demand for commercial real estate has driven up prices significantly, and investors who invested on solid fundamentals and held through the pandemic are reaping handsome rewards. If you have not yet gotten into the commercial real estate asset class, there is time to position yourself to invest passively.

Safe Investing!

RRII