SVN® International Corp. Economic Update – Keeping our clients up-to-date about the latest real estate landscape trends.
In January, the Consumer Price Index (CPI) in the U.S. increased by 0.3% month over month and 3.1% annually, surpassing market expectations and briefly impacting equity markets. The rise was largely driven by a 0.6% increase in the shelter index, contributing over two-thirds to the overall monthly CPI increase. While US energy prices fell by -0.9%, food prices increased by 0.4%. Federal Reserve officials cautioned against premature judgments on interest rate policies due to the volatility in inflation data and various influencing factors.
On the financial front, concerns have been raised regarding delinquent CRE debt held by major banks. Despite the decline in investment pledges to CRE funding vehicles from US pensions by 50% in 2023, the MSCI-RCA commercial property price index showed a slowing decline in U.S. commercial sector prices in January 2024. Industrial properties experienced a consistent increase, while the apartment sector saw an improvement over previous months. Retail and suburban office sectors faced challenges, reflecting the varying impacts of remote work on different property types. U.S. retail sales grew by 0.6% year-over-year in January, marking the slowest annual growth since the COVID-19 pandemic onset. However, a seasonal pull-back is expected in January and February after a holiday sales boom.
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