Dynamic is not typically a word people associate with commercial real estate. But, these days, the sector is in the midst of some big shifts that can make – or break – investment performance and force major pivots in strategy.
Fresh off the Fed’s 50 bps September rate cut, market participants are still trying to gauge what’s ahead for capital costs, liquidity and the much anticipated “soft landing” for the U.S. economy. On top of that, there are still plenty of challenges ranging from hybrid work and changing consumer behavior to subdued transaction activity and pressure on operating costs.
Given that backdrop, The Real Deal and national accounting firm Citrin Cooperman are once again teaming up for their third survey of the commercial real estate market to gain insight into the current state of the multifamily, office, retail and hospitality sectors. This year’s survey expands the scope from a focus on the East Coast to a national view. The annual survey offers a snapshot of expectations and perspectives from market insiders on the key issues developers and investors have been grappling with and what they foresee ahead for the coming year.
The outlook for office remains front in center with a heavy load of maturing loans hanging over the market fueling concerns about distressed debt. Will the gap between sellers and willing buyers continue to grow bigger compared to past surveys, or are more buyers now coming to the market in hopes of acquiring assets at an attractive basis? With vacancies still hovering at nearly 20%, what tenant sectors do market participants expect to perform the best in the coming year?
In the prior survey, multifamily was still riding a post-pandemic recovery. Nearly two-thirds of survey respondents predicted that rents would continue to rise; 46% thought vacancy rates would fall further and 44% viewed multifamily as a more stable asset class than other sectors. How are multifamily expectations shifting in the wake of a surge in new supply that has resulted in increased concessions and softening fundamentals? These and more questions will be answered in the 2025 State of the Market Survey.