2023 OUTLOOK: Opportunities Exist, Just Need to Find Them
POPULATION GROWTH IS KEY TO INVESTMENT ACTIVITY IN 2023
While we are not officially in a recession, inflation is surging and real wage growth is negative. Despite two open jobs for every one unemployed person, a shortage of labor is weighing down the U.S. economy today; labor is the critical issue above all else because you can’t grow despite demand if you can’t find workers to run the shop. This has culminated in slowing down CRE activity and uneven consumer spending across most of the U.S. during 3Q 2022. And now bank lending has paused as the Fed’s steep and frequent rate hike changes have made it very difficult to price a loan.
2022 MID-YEAR UPDATE: Appetite Still Strong
Ample capital and need for yield to continue driving investment activity in 2022
Following record-highs from 2021, commercial real estate activity has remained elevated in 2022 – led by multifamily, industrial and a strong rebound in retail. Despite widespread supply chain disruptions, inflation and political uncertainty around the war in Ukraine, investors were eager to unlock cash flow and pushed cap rates to record-lows in 4Q21 and 1Q22 across most sectors. Demand for real estate will continue to be strong for high-growth markets.