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| John Oharenko |
CHICAGO, IL – Inflation reached a 7% CPI in December, the highest level in 40 years. And the new year, the benchmark 10-year treasury climbed nearly forty basis points, finally settling at about thirty basis points.
As
a result, real estate investors scramble to redefine ownership strategies under
such conditions.
Managing
income streams surfaces as one of the main targets for inflation
control. Beyond raising revenues at inflation growth rates and
internal cost-cutting measures, investors need to pay attention to various
other factors, including the following:
Legislative Actions: The
recently passed, one-trillion dollar federal
infrastructure bill positively affects the industry. However, local and regional infrastructure funding
gaps exist, forcing more municipalities to levy higher property taxes, an
ongoing concern.
As for income
opportunities, America faces an extreme housing shortage, at about 2.5 million
units.
Policymakers continue
expanding workforce and affordable housing ownership and development
initiatives, including favorable financing, tax breaks, and other incentives.
Civic
Responsibilities: Environmental, Social
Governance ("ESG") compliance creates demand for moving beyond
profitability as a key performance metric.
Investors focus on
creating more sustainable projects for communities to benefit from, based on
the theme of "making the world a better place to live."
Income and expense management targets better redeployment of human and natural resources by creating a more inclusive and diverse employment base while targeting "green" development.
Automation: Labor
shortages, supply chain disruptions, security, and other significant concerns
vex investment planning, both short and long term.
Simultaneously,
dramatic improvement in "smart" technologies driven by artificial
intelligence help tackle some misgivings.
Overall costs of implementing such technologies are now well within reach of the real estate industry for creating more efficient property operations.
The
Real Estate Capital Institute® is a volunteer-based research organization that
tracks realty rates data for debt and equity yields. The Institute posts
daily and historical benchmark rates, including
treasuries, and bank prime.
CONTACT:
John Oharenko
john.oharenko@reci.com
Executive Director
director@reci.com / www.reci.com
The Real Estate Capital Institute®
Chicago, Illinois USA 60622
