Commercial real estate has faced numerous challenges on both the health and economic fronts since 2020. These difficulties have caused significant fluctuations in sentiment, as shown by the RCLCO Investment Survey.
However, according to the recent release of RCLCO’s Current Real Estate Market Survey in late December, there is a more positive outlook for the future. The survey write-up states that many respondents predict an improvement in real estate markets over the next six to 12 months.
Some key takeaways from this survey include:
– The RCLCO Current Real Estate Market Sentiment Index (RMI) measures at 15.47 on a scale of 100 during the past six months leading up to year-end 2023.
– Respondents believe that this index will increase by almost thirty points within a year, reaching out of distress/recession zone.
– While most respondents anticipate an upcoming recession within one year or less, only five percent expect it to be severe with more than a two percent decrease in GDP.
– Asset types such as for-sale housing and multifamily rental housing are currently experiencing downturns but may recover within twelve months.
– Most sectors of commercial real estate are expected to face some level of downturn; however niche sectors like self-storage and industrial show potential resilience while office is predicted to experience significant value decline overall.
In terms of economic sentiment:
– Over half (53%) predict interest rates will decrease while only about one-third (35%) foresee them staying consistent.
– A similar percentage predicts cap rate increases compared with those who forecast decreases or no change at all.
– More than half believe inflation will moderately decrease while just over one-quarter think it will stay constant; only twelve percent anticipate moderate inflation growth.
Compared with mid-year results from last year’s survey report, opinions have shifted towards increased optimism regarding capital flows into commercial real estate,” notes RCLCO.”
