The current macro environment should be viewed not as a traditional economic shock, but as a delay mechanism that pushes out the timeline for normalization, according to Ryan Severino, chief economist at BGO, in his recent report. Rising oil prices are less impactful for growth itself and more important for the uncertainty they introduce into the inflation outlook, which in turn affects central bank behavior.
For commercial real estate, the key issue is not deteriorating fundamentals but the timing and stability of interest rates, which are critical for valuations and transaction activity. Delayed rate declines prolong the adjustment in asset values, widen bid-ask spreads and slow deal flow, even as leasing fundamentals remain relatively stable.
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