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Green Street’s 2021 Sector Outlooks: Seeing the Forest and the Trees

This year we published a record 12 Green Street Sector Outlooks, including three for the first time: U.S. Single-Family Rental, U.S. Senior Housing, and Pan-European Residential. As always, what matters most is the quality, not just the quantity, of our research.

Green Street’s expanded series of 2021 Sector Outlooks go far beyond the well-documented disruptions caused by Covid-19, recalibrating commercial real estate forecasts and mindsets for a dozen core and niche property sectors in the United States and Europe. We believe that viewing the industry for the mid-to-long term provides the right analytical focus and value for our clients.

The Outlooks provide deep and comprehensive insights on operating fundamentals, valuation and the future of office, retail, senior housing, and for the first time, the rapidly growing single-family rental sector.

“As a juxtaposition to sectors seeing considerable declines in demand, the single-family rental sector features one of the more favorable operating outlooks in real estate,” said John Pawlowski, Green Street’s lead analyst for U.S. residential sectors. “With rent growth running above inflation in nearly every metro, the sector still appears to be in the early innings of a multi-year run in fundamentals.”

That’s the bird’s-eye view of the entire single-family rental forest. Other sectors, including apartments, require a close-up view of the trees within. Green Street made this clear to clients during a recent U.S. residential outlook webinar.

Watch the brief clip below for John Pawlowski’s perspective on the apartment sector, where property values overall are down about five percent during the past year, with wide variations from market to market.

Across the Atlantic, Green Street’s Pan-European Residential Outlook shows that, despite a year of mass unemployment and wide-spread job insecurity, operating fundamentals held up better than most core real estate sectors. The Pan-European residential sector will likely see stable fundamentals in 2021 and provide some of the most stable cash flows in the commercial real estate space.

“Europe's residential buildings are not similar to the product a U.S. multifamily investor would typically visualize,” writes Peter Papadakos, Green Street’s Head of European Research. “Quality of stock in terms of age and onsite amenities is lower, in general, but built quality is of a similar standard. Across Europe, institutional capital is directing enormous amounts toward modern, purpose-built rental housing. Older stock is undergoing significant modernization upgrades to be environmentally sustainable in anticipation of heavier regulation.”

Potential risks to watch include stricter rent controls, suburbanization, and poor demographics leading to a slowdown in household formations.


One key advantage of Green Street’s research and analysis is the ability to provide valuation estimates during the Covid-19 pandemic, when there’s been a dearth of benchmark-forming transactions. Our 2021 U.S. Mall Outlook addresses that challenge in the mall sector, where this is especially relevant. As you’ll see in the next chart, Green Street believes mall asset values have fallen approximately 45% from the 2016 peak, while mall appraisal values have dropped just 15%, likely because of a scarcity of transactions.


“Real estate funds would likely suffer a large impairment/write down charge associated with selling a mall at current clearing prices. A more palatable decision seems to be holding onto the asset and hoping the outlook for malls improves,” writes Vince Tibone, Green Street Senior Retail Analyst.

For a detailed discussion of the well-documented shortcomings of commercial real estate appraisals, contact Green Street to learn more about our research and a popular report for clients, Heard on the Beach: Tomorrow’s Newspaper.

Green Street Co-Founder Mike Kirby recently spoke to The University of Chicago’s Booth School of Business about the overall commercial real estate outlook for 2021. He noted that as the pandemic begins to subside, there remains a wide disparity in performance among various property sectors.

“These are about as bad as conditions get in the real estate world, and they’re even worse for some sectors, which are suffering even more than they did during the Global Financial Crisis,” Kirby said. “But what’s remarkable about the Covid recession is that some sectors have skated through just fine.  If you look at manufactured housing, industrial, life science, single family rental, tower, and data, no one told them we had a recession. In fact, some of them are doing better now than they probably would have in the absence of Covid.”

That’s the sort of perspective Green Street clients count on every day to make more informed decisions.

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