The commercial real estate market is on a rebounding phase, with a significant recovery in investor sentiment, after being adversely impacted by the coronavirus pandemic last year.
Notably, this bouncing back is obviously not without reasons. Vaccines for COVID-19 are being rolled out, raising hopes for the pandemic-struck world to resume normalcy this year with the immunization process. Further, there is substantial liquidity available in the market and the Federal Reserve is advocating an ultra-dovish stance, with officials planning to keep interest rates at ultra-low levels for a prolonged time, at least up to 2023. There are optimistic projections regarding 2021 GDP growth as well as expectations that the new administration will come up with significant fiscal stimulus measures. Moreover, government interventions continue to support debt markets worldwide, thereby helping the commercial real estate capital markets to recover. And as the economy continues to recover, the overall demand for the real estate is also getting a boost. Speaking about the dynamics within the industry, it is interesting to note that though the pandemic has weighed significantly on a number of segments of this industry, it has also fueled a number of trends that were present even prior to the health crisis, as well as compelled businesses to transform. Most remarkably, the global industrial leasing activity backed by e-retailing, as well as project management activities for occupier clients have been grabbing the limelight, proving their resilience amid the pandemic. A number of workplace trends that existed prior to the pandemic, like experiential workspaces, outsourced real estate functions, together with greater-than-before focus on employee well-being, have indeed gained prominence. This is opening up opportunities for the constituents of the commercial real estate industry to bank upon. Another important thing to take note is that the outsourcing of real estate needs is gathering more steam. Particularly, the large players are banking on this trend, with both existing as well as new client wins and expansions, and interestingly, this includes advising on re-entry strategies and code of behavior as well. Robust demand from logistics, financial services and technology industries is also encouraging. As such, this acceleration of certain trends, outsourcing real estate needs, vaccine roll out and waning macroeconomic uncertainty will likely help the Zacks Real Estate Operations industry, which comprises companies that provide leasing, property management, investment management, valuation, development services, facilities management, project management, transaction and consulting services, among others, to flourish this year. The industry currently carries a Zacks Industry Rank #83, which places it at the top 33% of more than 250 Zacks industries. Therefore, this is the time to enhance one’s portfolio with some real estate operation stocks that have solid fundamentals and are witnessing decent upward estimate revisions, suggesting analysts’ bullish expectations. Here are 4 Stocks to Pick: Jones Lang LaSalle Incorporated ( JLL Quick Quote JLL - Free Report) : Headquartered in Chicago, IL, Jones Lang LaSalle offers commercial real estate and investment management services. The company’s diverse range of products and service offerings, along with its strategic investments, give it a strong footing. The company’s Property & Facility Management business continues to benefit from its global platform’s strength and evolving outsourcing needs. It is seeing improvements in pipelines in both leasing and capital markets. With a decent balance-sheet strength and focused investment strategy, the company is poised to gain from market consolidations. The Zacks Consensus Estimate for 2020 and 2021 earnings per share moved 13.1% and 4.4% north over the past two months to $7.33 and $9.74. Additionally, the company’s long-term earnings growth rate is estimated at 9%. Jones Lang LaSalle currently sports a Zacks Rank #1 (Strong Buy). Realogy Holdings Corp. ( RLGY Quick Quote RLGY - Free Report) : This Madison, NJ-headquartered company is one of America's reputed real estate services companies. It offers brokerage services, relocation and title and settlement businesses as well as a mortgage joint venture. Realogy’s brands include Better Homes and Gardens Real Estate, Century 21, Coldwell Banker, Coldwell Banker Commercial, Corcoran, ERA and Sotheby's International Realty. The company is poised to benefit from the rebounding fundamentals of the real estate operations industry. This Zacks Rank #1 company is witnessing solid estimate revisions with the Zacks Consensus Estimate for 2020 and 2021 moving up 58.6% and 46.9% significantly over the past two months to $1.84 and $2.35, respectively. You can see . the complete list of today’s Zacks #1 Rank stocks here CBRE Group, Inc. ( CBRE Quick Quote CBRE - Free Report) : Headquartered in Los Angeles, CBRE Group is a commercial real estate services and investment firm. The company continues to benefit from the expansion of its contractual businesses. Its Global Workplace Solutions segment’s business has been resilient and is benefiting from occupier clients’ increasing reliance on the company for achieving efficiencies. A robust balance sheet supports the company’s acquisition moves aimed at enhancing its service offerings and geographic reach. CBRE Group carries a Zacks Rank #2 (Buy), at present. The Zacks Consensus Estimate for 2020 and 2021 earnings per share moved 3.7% and 1.6% upward, respectively, over the past week to $2.77 and $3.26. Additionally, the company’s long-term earnings growth rate is projected at 11%. Exp World Holdings Inc. ( EXPI Quick Quote EXPI - Free Report) : This Washington-based company offers cloud-based real estate brokerage services in the United States, Canada, the U.K., Australia and South Africa. It is the holding company for eXp Realty and eXp World Technologies, which operates the VirBELA platform. Amid the pandemic and social-distancing trend, demand for cloud-based real estate brokerage services, and rise in use and adoption of VirBELA will likely stoke this Zacks Rank #2 company’s growth. The Zacks Consensus Estimate of the company’s 2020 and 2021 earnings per share has been revised 73.3% and 62% upward, respectively over the past two months to 52 cents and 81 cents. The figures also represent significant year-on-year increases. 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