Trepp, Inc.’s Post

What are your predictions for 2024? #cre #interestrates #office #multifamily On The Horizon For CRE In 2024: All Eyes On Interest Rates, Ailing Office, Multifamily Supply Surge https://lnkd.in/eNweSFbs

This graph captures the challenges facing older office assets. Office demand is way down and lease transactions are mostly happening in the highest quality assets, the newest and best buildings offering the most amenities. When tenants vacate older/lesser quality buildings, the dynamic can quickly become a death spiral, as the investors can no longer service the debt - - - a broken capital stack. Today, all of this is happening at the very same time the equity partners and lender(s) must do 2 things to compete; 1) invest new capital to improve the asset and enhance amenities, and 2) reduce rent expectations. Of course, they're in no position to do either. In fact, they often begin to cut corners on maintenance and repairs, eroding the occupier experience, resulting in even more vacancy and less capacity to attract new occupancy. The severity of this office downturn is such that investors and lenders have now realized they're (mostly) unable to operate their way through to a better place. This is why we expect to see the pace of foreclosure increase, followed by a wave of discounted asset sales. #lowfogg #officemarkets

On The Horizon For CRE In 2024: All Eyes On Interest Rates, Ailing Office, Multifamily Supply Surge https://lnkd.in/dRHnDTXE

On The Horizon For CRE In 2024: All Eyes On Interest Rates, Ailing Office, Multifamily Supply Surge https://lnkd.in/dPdcUYXe

Since Q1 2022, submarkets that are immediately adjacent to downtown (so-called Inner Ring submarkets) have seen annual multifamily rent growth of 3%, outstripping lower-density suburbs and office-dominated downtowns. #CBRE

Latest Insights in Commercial Real Estate: Office vs. Multifamily Properties The first quarter of 2024 has brought significant changes in the commercial real estate (CRE) market. Key highlights include: Office Properties: 📉 Vacancy Rates: Hit a new high of 13.7% in March. 📊 Availability & Delinquencies: Both on the rise, reflecting slowing demand. 🚧 Construction Levels: Remain stagnant, contributing to increased vacancies. 🏢 Leasing Activity: Down by 30% compared to pre-pandemic levels. Multifamily Properties: 🔄 Net Absorption: More than doubled compared to Q1 last year. 📈 Demand: Increased due to high mortgage rates (around 7%). 📈 Vacancy Rates: Rose to 7.8% in March due to new housing supply. Market Overview: Interest Rates: Steady at 5.5%, affecting both sectors differently. Economic Impact: Hybrid work trends slow the office market, while consumer spending supports economic resilience. Discover more about these trends and their implications for investors and stakeholders.  Read the full blog here: https://lnkd.in/dCj_UcDf For more detailed insights and personalized advice, contact us at +1 (713) 412-2666 or email shams@businessadvisory.services #RealEstateInsights #OfficeProperties #MultifamilyProperties #CRE #MarketTrends #InvestmentOpportunity #CommercialRealEstate

Here's one illustration of the US #commercial #realestate market meltdown: values of commercial real estate continues to get destroyed in Chicago... A 155k SF office building in Chicago just sold for $17 million, or $109 per SF The seller took a huge 61% loss, paying $44 million for the building in 2017 Here's a worrying snippet from Crain's: "Thanks to remote work and higher interest rates, real estate investors can buy downtown office buildings on the cheap these days. Add a motivated seller trying to unload all of its office stock and the discount gets even steeper. Many office properties in the heart of the [Chicago] are now worth less than the mortgages tied to them, fueling a historic wave of distress." It will be interesting to see how bad the US commercial real estate meltdown gets (particularly in office) but it's certainly a story to keep an eye on in 2024 as big opportunities emerge". Source: TripleNetInvest

The past few years have created challenges for real estate appraisers. Economic disruption has led to a great of uncertainty regarding what people are looking for, and how can you appreciate something when you don't know its value? One area that's felt the brunt of this has been commercial office space. Despite calls to return to the office, remote and hybrid work trends have cut into the value of these spaces, either because fewer people are using them, or because companies having shifting needs regarding what they want from these spaces. That said, as Brian Pascus writes, there is one one appraisal method that remains consistently effective: the cash-flow approach. Commercial real estate properties are income-producing assets, so the cash flow coming out of a property can be used to determine its value relative to comparable properties on the market. #CommercialRealEstate #RealEstateInvesting

Despite softer lease volume and greater availability, pricing power remains firmly in favor of tenants in the Dallas-Fort Worth office market. CoStar's forecast calls for muted rent growth in the near term, with expectations for a rebound in 2026 and beyond. Join us as we track the trajectory of office rents in DFW and beyond! #PricingPower #MarketForecast

California office space occupancy stalls at less than half pre-pandemic levels Contact me to discuss the latest scoop in real estate! #investors #longbeachcalifornia #realestate #dreamhomes #homebuyers #homesofinstagram #properties #homesearch #realestateinvesting #housingmarket