A wide array of market forces, including inflation, interest rate hikes and a return to the office are compounding effects on commercial real estate in Chicago, across the U.S. and in global markets. The announcement that August inflation accelerated to 3.7% has caused further economic concern with more than 45 percent of real estate professionals being bearish on market conditions according to a 2023 Mid-Year Sentiment Report from DePaul/ULI Chicago.
Other headwinds include debt maturities, financial instability and recessionary threats which have resulted in a significant decline in investment activity as well as values; 75 percent think there will be an onset of recession by year-end while 45.3 percent believe it will be soft landing but 33 .6 expect it to be hard one instead .
In response , Mary Ludgin – Senior Managing Director & Global Head Of Investment Research at Heitman – commented “We are wrestling with inflation; The Fed made some remarkable moves over past year however I fear they may have overshot leading us into period slow growth or even recession” Steven Weinstock (Senior Vice President & Regional Manager at Marcus & Millichap) added “Hindsight is always 20/20 ; It’s easy speculate or suggest if Fed had taken aggressive posture sooner then everyone would better off now” Greg Warsek (Executive Vice President & Group Leader Commercial Real Estate at Associated Bank ) offered his opinion saying “We shocked system intent curbing inflation yet not certain we given enough time take hold” Finally Mike Kamienski (Partner Baker Tilly) concluded “What happening interest rates ,inflation lack transaction activity cause concern ; We all know investors like do deals so don’t expect lack transactional activity last too long”
