PwC's Deals Sector Leader John Potter and other partners discuss the deals outlook for the rest of 2021.
While the pandemic recovery is still in progress and uncertainties exist, real estate has reemerged as a stronger, more innovative sector and has continued to attract global and domestic capital. Real assets play a critical role in the social, demographic and economic shifts brought about by COVID-19 and the industry has met the pandemic-induced challenges head on. Emerging from the global health crisis, the sector has embraced innovation and flexibility in the use cases across various subsectors and has also focused on supporting broader environmental, social and governance (ESG) trends and societal shifts. Real assets continue to play an exciting role in the evolution of daily life and provide robust investment opportunities across multiple subsectors.
Much of the nation is readying itself to return to the office (at least partly), go out to shop and dine with friends, and, particularly over the summer months, take that long awaited vacation, if they haven’t already. These behavioral shifts after more than a year of time largely spent quarantining are likely to help spur increased investment in the commercial real estate industry.
Despite year-to-date transaction value as of April 2021 trailing the same period in 2019 and 2020 by 8% and 12%, respectively, investor demand remains strong. Notably, Preqin reports a total of $225.6 billion of dry powder held by private real estate funds targeting investments in North America as of June 2021. With a backdrop of improving fundamentals — over 558,000 jobs added in May, a sharp rebound of consumer spending and a willingness to travel — capital deployment will likely increase across all subsectors.
“Over the first six months of 2021 we have continued to observe increased levels of capital deployment. While the set up has headwinds, we expect to see this activity continue, particularly in healthcare, housing, and digital oriented sectors.”
Real Estate Deals Leader, PwC US
Real Estate Acquisitions Leader, PwC US
Director, PwC US