Inflation is among the worst nightmares depriving investors of peaceful sleep. Inflation erodes the value of corporate earnings and roils stock investors; inflation favors borrowers as debt repayments are made in lower value dollars, and inflation pummels consumers -- especially those on fixed incomes -- by depressing the purchasing power of their incomes. This article examines both inflation potential for the US economy over the next few years and the capacity of commercial real estate to provide inflation protection. Historically, commercial real estate has handily beaten inflation except during periods of severe supply gluts brought about by too much construction or a collapse in demand. Those periods have been infrequent on a national basis. For local markets, imbalances have been more prevalent, reflecting local market characteristics. Investors can benefit from focusing on these characteristics to build commercial real estate portfolios that promise stronger returns along with beating inflation.
INSIDER’S PERSPECTIVE Is Commercial Real Estate an Inflation Hedge? BY MARTHA S. PEYTON, PH.D., CRE INTRODUCTION AND FINDINGS important, commercial real estate performance for Inflation is among the worst nightmares depriving five-year holding periods has beaten inflation over i
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