JLL reports investor competition for commercial real estate hit its strongest growth in a year. Commercial real estate. The thing currently sitting empty because everyone works from home in their underwear trading options on their phone.
Bidding keeps rising despite macro uncertainty and volatility. Translation: rich people found a new way to light money on fire while pretending it's strategy. They're competing to own office buildings in a world where the office is dead. It's like a fierce auction for Blockbuster franchises in 2024.
The smartest technical analysis here is that none of this matters. Price goes up because people bid it up. Price goes down because they stop. JLL can dress it up with reports about growth trends and macro conditions. Doesn't change the fact that you're buying a depreciating asset in a dying category.
But sure, strongest growth in a year. A year ago these same investors were probably saying commercial real estate was uninvestable. Now they're tripping over each other to buy it. What changed? Nothing. They just got bored sitting on cash and needed somewhere to park their feelings.
Retail traders see this headline and think they missed the boat. They'll pile into REITs next week and watch them crater the week after when JLL releases a report saying actually the trend reversed. The professionals already know the play. Get in, pump the asset class with optimistic reports, distribute to bagholders reading headlines six months late.
The most bullish signal for commercial real estate would be if institutional investors stopped competing for it entirely.
Photo by Razvan Chisu on Unsplash
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