Pimco Sees ‘Storm’ of Opportunity

Pimco headquarters in Newport Beach, CA; the firm says the capital flows underpinning CRE values have grown “unstable.” (Photo: The Irvine Co.)

NEWPORT BEACH, CA—A confluence of factors is creating what investment management giant Pimco calls “a blast of volatility for US commercial real estate that we anticipate could lower overall private US CRE prices by as much as 5% over the next 12 months.” Within that volatile atmosphere, though, “attractive investment opportunities” will be created for “nimble investment platforms,” Pimco’s John Murray and Anthony Clarke write in a new report, titled US Real Estate: A Storm Is Brewing.

The litany of factors causing the turbulence—“volatility in public markets, tightened regulations, maturing loans and uncertain foreign capital flows”—is familiar to industry players by now. These are especially pertinent to CRE, write managing director Murray and VP Clarke, because pricing gains since the downturn have been driven not by improving fundamentals but by capital flows.