The Federal Reserve recently released a press statement on September 20, 2023, justifying its decision to maintain the Effective Federal Funds Rate (EFFR) within the range of 5.25% to 5.5%. The committee cited positive economic growth and continued job gains with low unemployment as reasons for their actions.
Despite an increase in the Consumer Price Index by 3.7% in August of that year, higher gas prices and other factors contributed to this rise from July’s reported rate of 3.2%. However, experts predict that inflation will continue to slow down based on cyclical patterns rather than indicating a re-acceleration of price hikes.
A recent report by Marcus & Millichap titled “Core Inflation Continues to Cool: Implications for Housing, Industrial and Retail Space” also supports this view but notes potential impacts on various sectors such as multifamily housing where rent growth has slowed down due to annual lease cycles reflecting earlier market conditions rather than current ones.
Similarly, industrial properties may face challenges due to increased diesel fuel costs but could benefit from reduced energy use prices for manufacturers like GlobiTech , Tesla , and LKQ who have recently moved into new facilities creating more jobs while keeping vacancies below long-term averages.
Retail properties have performed well so far in early-2023; however concerns arise over consumer spending if high gas prices lead households towards cutting back expenses on goods or services which could impact retailers’ motivation for expansion plans despite historically elevated asking rents driven by limited supply compared with demand projections remaining below long-term averages.
In conclusion,the analysis suggests that core inflation is likely slowing down overall,but certain industries may experience temporary challenges or opportunities depending upon specific market conditions.However,the outlook remains positive overall,and it is expected that vacancy rates will remain relatively low across all sectors while rental rates are projectedto stay at historical highs.The future looks promisingfor commercial real estate investmentsin the coming years.
