Saturday, Oct 5, 2024

Economic Trends and Issues Affecting the Commercial Property Industry in 2023 and Beyond


Economic Trends and Issues Affecting the Commercial Property Industry in 2023 and Beyond


1. The increase in interest rates, combined with high borrowing rates, have forced up capital rates causing property values to adjust downward.
2. Strong job growth is supporting prices in many markets. We are beginning to see some decline in commercial appraisal values, since capital rates cannot match up with higher borrowing costs.
3. The most vulnerable to price decreases are offices.
4. The influence of inflation and interest rates is the leading concern this year.
5. Ongoing uncertainty in the global economy could impact the commercial industry even more.
6. They could also have an indirect impact by slowing economic activity, reducing demand for commercial property.
7. Cost of capital, capital availability, property prices, vacancy levels, leasing activity, transaction activity, and rental rates are expected to improve or stabilized next year.
8. A recession has the potential to reduce demand across all real estate asset classes.

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