As COVID-19 has reset the economic cycle, the 2021 Investors Intentions Survey from CBRE finds that investors are seeking higher returns.

While most core or core-plus investors expect their unlevered target returns to fall slightly or stay the same, those further out on the yield curve anticipate gains. Almost one-third of investors that are targeting distressed assets expect their returns to jump two percentage points, according to CBRE. Another 45% of these investors said their return expectations will remain the same.

Even opportunistic and value-add investors expect better returns. The return expectation of risk-averse investors fell due to a couple of significant factors, according to CBRE. More than 30% of respondents said that intense competition for assets was pushing down returns. Another 20% said uncertainty around the length of the pandemic drove down returns. Around 20% said the cost of capital was contributing to adjusted returns. Roughly 15% of respondents said lack of appropriately priced inventory contributed to low returns, and other 15% said limited NOI growth affected returns.