A Mild Ending, A Fresh Start: Richard Barkham's Post-CBRE View of the CRE Market
The End of a Cycle - Without the Crash
After 40 years in the field and a distinguished final act as Global Chief Economist at CBRE, Richard Barkham's take on the state of commercial real estate is disarmingly calm. "This has been the mildest end of cycle that we've seen in 40 years – in fact, in my whole career," he says.
Unlike previous downturns - 1989, 2000, 2008 - which were accompanied by macroeconomic crises, today's cycle-end feels strangely undramatic. Vacancy rates have risen, prices have declined 25-30%, and capital markets activity has bottomed out, but there's been no systemic financial collapse.
Why?
In Barkham's view, the macro cycle hasn't ended. "We've got the end of a real estate cycle, but no end of the macro cycle." Yet.
This divergence - CRE in a correction, the economy still growing - frames his optimistic outlook for real estate.
Stimulus, Not Stability
The recent U.S. tax bill has added short-term fuel to the macro picture. Barkham describes it as a "stimulatory" package: it injects fiscal stimulus into an already resilient economy, even if the longer-term consequences include rising national debt and pressure on Treasury yields. "There's a degree of stimulus in that bill… which will allow a certain amount of certainty, confidence and stimulus to boost growth."
But not all stimulus is equal. Barkham worries that "the higher the debt-to-GDP ratio goes, the more upward pressure there is on the ten-year Treasury," which forms the basis for CRE pricing. He sees an elevated 10-year yield, anchored in the 4–4.5% range, as a likely headwind for valuations, particularly for highly levered deals.
Still, he believes the U.S. economy can absorb this, a
