Forecast Calls for More Transaction and Cap Rate Stabilization!

Forecast Calls for More Transaction and Cap Rate Stabilization!

 

Forecasts are helpful, but their accuracy is ultimately what counts. CBRE conducted a review of its forecasts made at the beginning of the year and has updated its outlook through year-end and into 2024. Overall, the company has accurately predicted the trends in the CRE capital markets, with a few exceptions.

One notable change is the prediction regarding the timing of a recession. Due to the resilient economy and persistent inflation, CBRE now forecasts that if a recession occurs, it will happen in late 2023 or the first quarter of 2024, one quarter later than originally anticipated. A recession may lead to a mild increase in unemployment, reaching about 5%. Additionally, higher interest rates and the restart of student loan payments could negatively impact growth in the second half of this year. CBRE has adjusted its GDP growth forecast for 2023 upward to 0.6% and downward for 2024 to 1.3%.

Investors have been cautious in their transactions this year, with volume down by 60% year-over-year in the second quarter. Uncertainty surrounding interest rates, the economic outlook, and tighter credit conditions are expected to continue hindering deal flow. However, CBRE predicts that more stable conditions will emerge before year-end, leading to an increase in investment activity.

Cap rates have increased by approximately 125 basis points for most property types, but variations exist by market, with office assets experiencing a closer to 200 basis point increase. By early 2024, cap rate stabilization is expected for all property types, except for offices, which will stabilize by the middle of next year.

Investment volume is forecasted to decline by 37% year-over-year this year, but is expected to increase by 15% next year due to greater certainty about interest rates and a more positive economic outlook that supports stronger purchasing activity.

Lastly, an interest rate cut is not expected until early 2024, and the 10-year Treasury rate is projected to end this year at 3.8%, before falling closer to 3% late next year.

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If you are in need of an experienced commercial real estate broker I can be reached at 281-222-0433, or you can visit here to schedule a consultation: https://calendly.com/vikingenterprise

https://www.houstonrealestatebrokerage.com/

https://houstoncommercialmortgage.com/

https://www.houstonrealestatebrokerage.com/

https://houstoncommercialmortgage.com/

https://www.tenantbase.com/advisors/bill-rapp/

https://www.billrapponline.com/

https://findamortgagebroker.com/Profile/WilliamRappJr28883

https://doctorvideo.billrapponline.com/

https://veteransvideo.billrapponline.com/

https://mortgageviking.billrapponline.com/

https://fha203h.billrapponline.com/

https://renovationvideo.billrapponline.com/

#Commercial Real Estate Broker #Commercial Leasing #Commercial Lending #Structured Finance #Commercial Sales #Commercial Real Estate Investment #Commercial Real Estate Development #eXp Commercial – Viking Enterprise Team #Agent Attraction