Heading into 2021, CRE investor sentiment is strong—depending on the asset class. According to the Allen Matkins/ UCLA Anderson Forecast biannual commercial real estate survey, investors are optimistic on multifamily and industrial product, but for retail and office, the outlook is dreary.

Industrial fundamentals have held steady through the pandemic, and investor sentiment has reflected the strong dynamics, which are driven by ecommerce activity and a permanent change in household purchasing triggered by the pandemic. Participants in the survey were optimistic about the industrial market over the next three years. About 30% of participants said that they are now looking to increase exposure to industrial product this year.

The sentiment response also reflects investment activity this year. Industrial was the clear winner during the pandemic. The market had positive net absorption for the 40^th consecutive quarter, and effective rents continued to grow throughout the year. This activity not only drove strong optimism in the market but also investment activity, which surged at the end of the year. Several major investors made substantial investment purchases at the end of 2020, including KKR, Allianz Real Estate and Rexford Industrial Realty.