Commercial real estate has faced numerous challenges on both the health and economic fronts since 2020. As a result, there have been significant fluctuations in sentiment among respondents of the RCLCO Investment Survey.
However, according to the organization’s Current Real Estate Market Survey released in late December, there is a more encouraging outlook for the future. The survey write-up states that a large portion of respondents predict an improvement in real estate markets over the next six to 12 months.
Some key takeaways from the survey results include:
– The RCLCO Current Real Estate Market Sentiment Index (RMI), which is measured on a scale of 100 points, stood at 15.47 during the past six months ending at year-end 2023.
– Respondents believe that this index will increase by nearly 30 points over the next year to reach out of distress/recession zone.
– While most respondents anticipate an upcoming recession within one year or less, only about one-third feel it is currently happening or unlikely within two years.
– Downturns are expected across various asset types such as for-sale housing and multifamily rental housing but with potential recovery within twelve months.
– Most sectors are expected to experience some level of downturn except for niche sectors like self-storage and industrial which may show more resilience.
– Office sector may see significant overall value decline compared to other sectors.
In terms of economic sentiment:
53% expect interest rates will decrease while only about one-third forecast them staying unchanged; cap rate increases were predicted by just under half those surveyed with slightly fewer expecting no change; inflation was anticipated by just over half those surveyed who also felt it would be moderate rather than severe; capital flows into real estate were seen as likely increasing compared mid-year results when opinions had shifted negatively instead due largely because greater numbers now expect increased capital flow,” says RCLCO added.”
