Take a look into the current state of the Commercial Real Estate market in 2024 with insights about the top six considerations.
MACROECONOMY & LABOR ENVIRONMENT
Economic Growth and Labor Markets: US economic growth led all G7 nations in 2023, growing by 2.5%.
Touching Down, but Gently: Job growth exceeded consensus expectations during both January and February.
Interest Rate Environment: There is a clear consensus (89MA.5% probability) that at least two rate hikes will arrive in 2024.
Click here to read the entire Macroeconomy & Labor Environment report.
INDUSTRIAL
Financials: According to MSCI Real Capital Analytics, industrial transaction volume totaled $90.2 billion in 2023. In total, cap rates rose by 58 basis points last year — marking the largest one-year increase since MSCI Real Capital Analytics began tracking the sector in 2001.
Regional Performance: For the second year in a row, the Southeast industrial sector reigns supreme.
Click here to read the entire Industrial report.
MULTIFAMILY
Financials: The $119.6 billion in apartment deal activity was the lowest annual total since 2014. Driven by rising capital costs, cap rates continued their ascent for every core property type in 2023.
Regional Performance: While cap rates still rose in the Midwest last year, they did so by a smaller magnitude than in every other region.
Click here to read the entire Multifamily report.
OFFICE
Financials: Within the span of a year, office cap rates rose from their all-time lows to their highest point since 2015. With office cap rates on the rise, valuations took another hit in 2023.
Regional Performance: The West rises to the top of this year’s office rankings thanks to a well-rounded performance across the three relevant criteria.
Click here to read the entire Office report.
RETAIL
Financials: In total, cap rates rose an average of 50 bps across the sector, rising to 6.8%.
Regional Performance: Pricing improved in Retail transactions from $472 per square foot (PSQFT) in 2022 to $475 PSQFT in 2023.
Click here to read the entire Retail report.
ALTERNATIVES
Single-Family Rentals: According to data from CoreLogic in December 2023, the latest month of data availability, SFR rents grew by an annualized 2.8%, roughly in line with pre-pandemic levels.
Hotel: Leisure travel rose to its highest level since the Federal Reserve began tracking the data in 2015, with roughly 1-in-3 US households taking a vacation in the Summer of 2023.
Life Sciences: According to data from Revista, $3.2 billion of life science assets was traded in the fourth quarter of 2023, the highest volume since the third quarter of 2022.
