From the astonishing resilience of retail to the continued turmoil in the office market, the commercial real estate industry has been seeing some surprising figures come out of the end of 2022. Read on to find out more about how fluctuating capital markets, the rise of hybrid and remote work models, the pandemic-driven exodus from cities and more are impacting CRE.
Office CRE News January 2023
While the highest-ranking company officials often make the decisions surrounding the transition to a hybrid or remote work model, it is often middle managers who are stuck implementing these complex practices. Now more than ever, these individuals are in need of proper training and support if these new models are to succeed.
January 9, 2023: 'Why Would I Throw Good Money After Bad?' Uptick Of Office Loan Defaults Is Likely On The Way
As the U.S. continues to experience economic turmoil, some office owners are being forced to face the music when it comes to the office market. Moody’s Analytics found that throughout the U.S., net absorption dropped from over 3M SF in Q3 to negative 7.13M SF in Q4, while vacancy rose to 18.7% for the fourth quarter in a row.
Capital Markets CRE News January 2023
January 3, 2023: You’re Probably Going To Lose Money In 2023. But There’s Light At The End Of The Tunnel
While 2023 is likely to bring subdued liquidity, plummeting prices and increased distress, it could also be a time when interest rates reach their highest point and investors feel assured about making additional investments. Experts from Green Street, Nuveen, Lasalle Investment Management and more weigh in.
January 3, 2023: Smaller Banks Are Stepping Into The CRE Lending Void. For Now
As the large banks that traditionally serve as a primary source for CRE debt pull back due to economic uncertainty, smaller regional banks are stepping in to fill in the gap. If interest rates do not level off soon, however, these banks may also have to rethink their positions and become more selective with the deals they choose.
January 8, 2023: 2023 Will Be The Year Of Distressed Debt No One Wants To Buy
In challenging economic times, many real estate investors turn to distressed assets. In 2023, however, private equity funds that have arranged to purchase distressed assets are struggling to get the debt they need to bring forth the returns promised by their sponsors. What does this mean for the distressed market?
Economy CRE News January 2023
January 12, 2023: Millions Permanently Moved Out Of U.S. Cities During The Pandemic. How That Is Affecting CRE Is Complicated
More than 1 million people left both California and New York following the beginning of the pandemic. Many of them chose to join the millions of Americans making western states with wide open spaces like Montana, Utah and Idaho their home. This has opened up new possibilities for real estate developers who are looking to follow the population shifts.
Construction CRE News January 2023
January 5, 2023: Merchant Developer Model Hits Skids After Years Of Driving Returns
Developers who construct a property and sell it quickly rather than keeping the investment properties — also known as merchant developers — have spent years enjoying readily-available capital and high investor demand. Today, however, high interest and cap rates, in addition to economic uncertainty, are making this model increasingly difficult to carry out, if not impossible.
Industrial CRE News January 2023
Obtainable industrial sublease space has increased in square footage by around 46% beginning in early 2022, particularly among spaces over 200K SF. While many may assume that Amazon, which has been trying to pare down its warehouse inventory, may be responsible for this trend, it is actually being driven by the manufacturing sector.
In the wake of the pandemic and the e-commerce boom that followed, Amazon added 125M SF of warehouse space in 2020 and 137M SF in 2021. Now, the company is working to pare down its warehouse inventory, though data suggests it could take three years for Amazon to bounce back from adding so much space so quickly.
Multifamily CRE News January 2023
January 5, 2023: Rental Rates Cooling In 2023 As Midwest Gains On The Sun Belt
Rental rates across the country are expected to rise at a much slower rate in 2023 compared to 2022. Numbers suggest that while the Sun Belt rental market was thriving in 2020 and 2021, the Midwest could be poised to overtake it, with cities like Indianapolis, St. Louis and Oklahoma City seeing major growth.
Retail CRE News January 2023
January 9, 2023: Downtime Counted ‘In Hours’: Food Halls Emerge As The Safe Bet For Restaurant Industry Development
Food halls have emerged as a darling of the retail asset class and emerged from the pandemic relatively unscathed compared to their restaurant counterparts. In fact, the positive trend seen in food halls across the country have led to experts calling them a safe investment in the sometimes uncertain restaurant industry.
January 13, 2023: REPORT: Retail Vacancy Lowest Since Before Great Financial Crisis
Despite concerns that the e-commerce boom created by the pandemic would lead to the fall of brick-and-mortar retail once and for all, a new report shows that U.S. retail vacancy has reached new lows. The report, from Cushman and Wakefield, showed that during Q4 2022, vacancies overall dropped 20 basis points to 5.7%, at the lowest point since 2007.