Investors To Remain On Sidelines Until 2025

Despite market fluctuations, many investors and property owners report stable real estate values and rents, with expectations that commercial real estate (CRE) will remain steady for the rest of the year.

A recent survey by Matthews Real Estate Investment Services found that 55% of investors noted unchanged property values in the first half of the year, while 46% reported stable rental rates. Around 30% saw declines in values, with only 2% experiencing significant drops. Conversely, 30% reported increased rents.

These mixed results may be linked to Class A developments in the Sunbelt region, which have driven up average rents but also increased vacancy rates. Half of the investors rated their CRE investments as average, with 33% rating them as good.

Looking ahead, respondents anticipate flat values and transaction volumes, alongside a modest 25-basis-point interest rate cut by year-end. However, many believe that significant transaction activity may not resume until next year.

Concerns remain regarding the retail sector, particularly for restaurants, while multifamily properties are projected to perform best in the latter half of 2024. Investors largely plan to remain cautious due to challenges in finding suitable properties, with some expecting the best buying opportunities to arise in late 2025.

Overall, the primary concern for CRE in the coming months is a potential economic downturn, overshadowing worries about market saturation and interest rate fluctuations.

 

Source:  GlobeSt.