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Where we’re headed: The emerging trends in the CRE market of which investors should be aware
In today’s rising interest rate environment, there are uncertainties on the horizon for commercial real estate investment. The concern surrounding higher cost of debt capital, tighter underwriting, lower prices and disappearing deals is growing, and investors are reassessing their investment strategies. Overall, though, signs are pointing to another strong year. Post-COVID recovery and infrastructure investment are driving the momentum for national growth across several commercial real estate sectors, with rents remaining high and vacancy rates hitting cyclical lows. This is especially seen with multifamily occupancy levels remaining above 95 percent and projecting to reach nearly 7 percent growth in net effective rents for the year.
Office continues to lag as the hybrid work model trends high, but retail is expected to see improvement as retailers are using space more efficiently, sales per square foot are recovering with new store developments and rising retail sales, and