Rate hikes to cloud CRE deal forecast into 2023

It’s the end of the year as we know it, and investors feel uncertain.

Rate hikes have slowed deals in the second half of 2022, and Federal Reserve Chairman Jerome Powell said there’s more pain to come.

But how long can investors’ ample dry powder sit on the sidelines?

The deal dam may break halfway through 2023, Moody’s senior economist Thomas LaSalvia said on the latest episode of TRD’s podcast “Deconstruct.”

“The market is going to have to adjust starting in the middle of next year,” LaSalvia said. “I have a feeling that we will start to see deal volume pick up a little bit more as prices maybe adjust a little bit and also as investors find creative ways to get deals done.”

But each sector holds its own nuance as rates keep rising, inflation remains high and recession looms. Multifamily’s record-breaking rent growth is likely to lose steam. Retail sales may finally feel the impact of heightened prices, and the fate of office could finally come into focus.

Tune into the full episode for a sector-by-sector breakdown of what research firms expect for 2023. The podcast will be back after a holiday break on January 9 with a new episode on Apple Podcasts, Spotify, Audible or wherever you get your podcasts.

This episode was brought to you by Dottid.