Cadre Price Trend Indices: CRE Sees Additional Growth in Q1 2022
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Executive Summary:
- Commercial Real Estate (CRE) prices continued to rise, showing strong growth year-over-year ending 3/31/2021 (8.0%) and for Q1 2022 (0.8%).
- The multifamily sector led growth for the year (14.3%), and showed the strongest appreciation quarter-over-quarter (1.5%).
- Miami led CRE market growth year-over-year (23.4%) and also demonstrated the strongest growth quarter-over-quarter (2.6%).
Above: showing the national average appreciation for properties across all CRE asset types. 100 is used as a representative starting price to demonstrate average price growth since April 2021. Below: showing the national average of year-over-year return of all CRE asset types, spanning 6/30/2002 - 3/31/2022.
About the Cadre Price Trend Indices
The Cadre Price Trend Indices (PTI)[1] track CRE pricing trends in over 50 U.S. metropolitan areas across multiple property types, including multifamily, industrial, retail, and office.
Cadre uses the PTI to help determine what we believe to be the most attractive investment markets in the United States with a high potential for growth: The Cadre 15.[2]
The PTI represents a substantial improvement over other price indices, thanks to Cadre’s innovative model that pulls in actual transaction data instead of pre-sale appraisal values. Cadre’s Data Science team optimizes repeat transactions to draw more accurate pricing correlations, then analyzes the results to produce actionable investment insights for investors.
To dive deeper into how the Cadre Price Trend Indices were developed and their benefit to both our platform and our investors, read more here.
1Q 2022 Market Update - Combined CRE Indices
Above: Chart shows the national average year-over-year return of all CRE asset types, specifically with returns for assets held from 4/1/2021—3/31/2022. Below: Chart shows the average quarter-over-quarter return of all CRE asset types, starting with returns for assets held 4/1/2021—3/31/2022.
The Cadre PTI revealed prices continued to rise across all property types in Q1 2022. Since April 2021, our national all-asset index (ALL), which reflects growth across all property types we track (multifamily, industrial, retail, and office), rose 8.00%, with multifamily leading at 14.28%. Retail showed the slowest growth at 3.99%.
Quarter-over-quarter, the ALL index posted an increase of 0.82%, which generally showed that CRE market prices are trending towards normal levels.
Performance by Property Type
As of 3/31/2022, multifamily assets led all property types in quarter-over-quarter growth, up 1.48%. Retail showed the slowest growth at 0.42%.
Performance by Market
Chart shows the compound annual growth rate (CAGR) in U.S. cities across all CRE asset types, comparing quarter-over-quarter growth (1/1/2022—3/31/2022) to year-over-year growth (4/1/2021—3/31/2022).
Individual market performance has been mixed this year. At the top end, Miami and Phoenix continued to show strong performance across all property types we track, rising 23.44% and 19.32% year-over-year respectively as of 3/31/2022.
Boston and Orlando performed at the bottom of the pack, though both still showed positive growth. The ALL indices tracking these metros performed below average, appreciating only 4.94% and 6.23% respectively in the one-year time period ending 3/31/2022.
Quarter-over-quarter, Phoenix (1.69%), Miami (2.62%), and the Inland Empire (1.76%) metropolitan areas have shown the strongest growth, largely due to factors like rising population and employment opportunities.
On the other side of the spectrum, price growth in San Antonio (0.36%), Seattle (0.40%), and Orlando (0.48%) markets ran cold in Q1 2022.
Performance Within the Cadre 15
We continue to see Cadre 15 markets appreciate at a faster rate than the average for other metropolitan areas. These top markets in the U.S. with strong potential for risk-adjusted returns grew 1.19% over the past quarter, pushing one-year gains as of March 2022 to 11.50%. The average for all metros was 0.82% in Q4, bringing the one-year growth to 8.00%.
Above: Chart shows the average appreciation for properties across all CRE asset types in Cadre 15 markets versus U.S.metropolitan areas as a whole. 100 is used as a representative starting price to demonstrate average price growth since April 2021. Below: Chart shows the average year-over-year return of all CRE asset types in Cadre 15 cities versus all U.S. metropolitan areas. The chart begins with returns for assets held 4/1/2021—3/31/2022.
Join Cadre for Additional Insights and Analysis
At Cadre, our Data Science team analyzes pricing information on a quarterly basis to deliver actionable insights. This combination of machine-learning and human analysis helps us deliver detailed, data-driven observations that no other CRE investment manager provides to their clients.
Become a Cadre member to get access to our investment deals and additional exclusive insights.
Notes and Definitions
Cadre’s price indices are based on observed repeat sale transactions of CRE properties. They reflect market price dynamics based upon actual transaction prices.
The 1Q 2022 release of these indices incorporates transaction data from public, paid and proprietary sources, observed through 3/31/2022.
Cadre’s price indices allow for backwards revisions. As new transactions are observed the full history of index levels can be affected.
Cadre’s price indices cover the 52 largest metropolitan areas in the U.S. and multiple asset classes, including multifamily, industrial, retail, and office.
About Cadre
Cadre is a groundbreaking technology-driven commercial real estate investment platform that offers both institutional and individual investors the opportunity to access expertly curated real estate assets with low minimums, low fees, and potential for liquidity. Via its data-driven and transparent approach, Cadre opens participation in a historically opaque and illiquid asset class.
Along with its traditional investment offerings, Cadre also provides investors with the ability to pursue highly vetted commercial real estate opportunities and the opportunity to seek liquidity through its proprietary secondary market, a unique offering within the industry.
Since Cadre’s founding, Cadre has closed more than $4.5 billion in real estate transactions across 24 U.S. markets. Cadre has exited nine investments with an 18%+ targeted realized average net IRR[3] and in total has returned approximately $300 million of capital[4] to Cadre investors to date. For additional information, please visit cadre.com.
- Indices are unmanaged and investors cannot invest directly in an index. Unless otherwise noted, performance of indices does not account for any fees, commissions or other expenses that would be incurred. Returns do not include reinvested dividends. ↩︎
- The Cadre 15 is a list of metropolitan statistical areas periodically identified by Cadre as commercial real estate markets with strong potential for risk-adjusted returns. The Cadre 15 is developed through a combination of quantitative and qualitative analysis, including predictive analytics and on-the-ground intel. Quantitative analysis involves forecasting two-year growth projections for each market and asset class based on various variables known to drive market appreciation including but not limited to population growth, employment, rent growth, new construction, and occupancy. Qualitative analysis involves a review of quantitative data by our industry experts. There is no guarantee that an investment in a Cadre 15 market will be successful. ↩︎
- IRR calculation represents an equity-weighted average annualized internal rate of return (IRR) for realized real estate investments of offerings by Cadre since the formation of our Investment Committee through to the date of calculation, after deduction of fees and expenses. Equity multiple represents the investment multiple on equity, which is calculated by dividing the aggregate realized proceeds for the applicable investment after deduction of fees and expenses. For recently realized investments, an estimate of proceeds to vehicles managed by Cadre may be used. The use of a different methodology may result in a materially different return metric. Our realized investments consist of: (1) Astoria Portfolio, a 143-unit multifamily asset in Queens, NYC, acquired January 2015, with a realized net IRR of 15.1% and a net equity multiple of 1.4x, (2) Sugarloaf trails, a 268-unit multifamily asset in Suburban Atlanta, acquired April 2017, realized net IRR of 27.4% and net equity multiple of 1.8x, (3) Skyridge Apartments, a 364-unit multifamily asset in suburban Chicago, acquired November 2016, with a realized net IRR of 15.0% and net equity multiple of 1.4x, (4) Avida, 421-unit multifamily project, located in Salt Lake City UT, acquired August 2017, realized net IRR of 16.8% and realized net equity multiple of 1.4x, (5) Crestleigh Apartments, a 389-unit multifamily asset in Laurel, MD, acquired September 2016, with an updated target net IRR of 10.2% and a net equity multiple of 1.6x, (6) Trails Portfolio, two multifamily properties totaling 810 units in Houston, TX, acquired January 2018, with an updated target net IRR of 22.4% and a net equity multiple of 2.0x, (7) Solis at Winter Park, a 596-unit multifamily asset Winter Park, FL, acquired, September 2018, with an updated target net IRR of 18.1% and a net equity multiple of 1.7x, (8) Lodge at Copperfield, a 330-unit multifamily asset in Houston, TX, acquired November 2018, with a updated target net IRR of 21.8% and a net equity multiple of 1.9x and (9) Lincoln Place, a multifamily asset in Sacramento, CA, acquired July 2018, with a updated target net IRR of 22.0% and a net equity multiple of 1.9x. ↩︎
- Aggregate capital to investors refers to the sum of any income distributions, sales gains, and return of capital without deduction for any investor specific withholding or contribution interest. ↩︎
Disclaimer
Educational Communication
Not AdviceThe views expressed above are presented only for educational and informational purposes and are subject to change in the future. No specific securities or services are being promoted or offered herein.
Not Advice
This communication is not to be construed as investment, tax, or legal advice in relation to the relevant subject matter; investors must seek their own legal or other professional advice.
Performance Not Guaranteed
Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections are not guaranteed and may not reflect actual future performance.
Risk of Loss
All securities involve a high degree of risk and may result in partial or total loss of your investment.
Liquidity Not Guaranteed
Investments offered by Cadre are illiquid and there is never any guarantee that you will be able to exit your investments on the Secondary Market or at what price an exit (if any) will be achieved.
Not a Public Exchange
The Cadre Secondary Market is NOT a stock exchange or public securities exchange, there is no guarantee of liquidity and no guarantee that the Cadre Secondary Market will continue to operate or remain available to investors.
Opportunity Zones Disclosure
Any discussion regarding “Opportunity Zones” — including the viability of recycling proceeds from a sale or buyout — is based on advice received regarding the interpretation of provisions of the Tax Cut and Jobs Act of 2017 (the “Jobs Act”) and relevant guidances, including, among other things, two sets of proposed regulations and the final regulations issued by the IRS and Treasury Department in December of 2019. A number of unanswered questions still exist and various uncertainties remain as to the interpretation of the Jobs Act and the rules related to Opportunity Zones investments. We cannot predict what impact, if any, additional guidance, including future legislation, administrative rulings, or court decisions will have and there is risk that any investment marketed as an Opportunity Zone investment will not qualify for, and investors will not realize the benefits they expect from, an Opportunity Zone investment. We also cannot guarantee any specific benefit or outcome of any investment made in reliance upon the above.
Cadre makes no representations, express or implied, regarding the accuracy or completeness of this information, and the reader accepts all risks in relying on the above information for any purpose whatsoever. Any actual transactions described herein are for illustrative purposes only and, unless otherwise stated in the presentation, are presented as of underwriting and may not be indicative of actual performance. Transactions presented may have been selected based on a number of factors such as asset type, geography, or transaction date, among others. Certain information presented or relied upon in this presentation may have been obtained from third-party sources believed to be reliable, however, we do not guarantee the accuracy, completeness or fairness of the information presented.
No U.S. or foreign securities commission or regulatory authority has recommended or approved any investment or the accuracy or completeness of any of the information or materials provided by or through us.
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