SVN® International Corp. Economic Update – Keeping our clients up-to-date about the latest real estate landscape trends.

Despite reports of a slowdown in industrial real estate demand following the post-COVID boom, heavyweights Prologis and Link Logistics continue to drive expansion in warehouse use. While the growth rate has softened from the record levels of 2022 and early 2023, e-commerce’s share of retail sales remains strong, prompting operators with ample liquidity to remain active in the current environment. Mixed-use projects are also gaining traction as investors consider repositioning portfolios amid trouble in the office sector, offering a blend of office, retail, and residential spaces to revitalize at-risk sub-sectors like indoor shopping malls and CBD office spaces.

While the US commercial real estate market experiences varied sector-level performance, the decline in prices has slowed, particularly evident in the industrial sector, which saw a modest increase in prices year over year. However, apartment and retail sectors continue to face declines, albeit at a moderated pace compared to previous quarters. Moreover, the rising relative cost of commercial real estate debt compared to corporate debt indicates a shift in investor perception of risk within the sector. UBS’s warning of potential headwinds, including higher borrowing costs and slumping demand, highlights the need for vigilance in navigating evolving supply and demand dynamics in the commercial real estate market.

Click below to keep reading about the latest updates including CRE Risks to Banks, Federal Reserve Rate Decisions, NAR Settlements, and more!