In 2022, real estate M&A activity will continue to be high, although it will likely be unevenly spread—the result of spillover from the 2021 sector story of “hot” versus “not.” The ability to rapidly pivot and adapt in today’s dynamic macroeconomic environment is an essential attribute of effective M&A deal teams.
A look at real estate mergers and acquisitions
The pandemic has reshaped and reprioritised where and how people live, work, and play, and their choices are exerting major influence on commercial real estate (CRE) industry mergers and acquisitions (M&A) activity. Performance measures across the industry make one thing abundantly clear: sector matters.
Read more about real estate industry trends across office, industrial, retail, hotel and leisure, residential, and nontraditional sectors, and see our full real estate M&A outlook for 2022.
Signs of progress in the real estate M&A landscape
We expect to see continued high levels of CRE M&A activity in 2022. Pent-up demand, ready access to capital, a low-interest environment (at least for the near term), and abundant “dry powder” should have investors clamoring for properties in the hot industrial and residential sectors, despite their rich prices.
Optimism appears to be growing for a moderate uptick in the office and hospitality sectors, and retail’s surprising fourth-quarter performance may be an indicator of better times ahead. Potential headwinds include fierce competition for scarce assets, the impacts of rising inflation and interest rates on company valuations and deal financing, and impact of escalating geopolitical turmoil on the global economy.
2022 real estate M&A drivers and trends
To adapt and grow in the future, real estate executives should consider how to address the following global and US-specific trends.