A wide array of market forces, including inflation, interest rate hikes and the return to the office are having 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 believe there will be a recession by year-end with 45.3 percent expecting it will be soft while 33.6 predict it will be hard landing for CRE markets globally .
Responding to these findings Mary Ludgin , Senior Managing Director Global Head of Investment Research at Heitman said “We are wrestling with inflation – The Fed made some really remarkable moves over the past year but I fear they likely 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 more aggressive posture sooner we would all better off now” Greg Warsek Executive Vice President & Group Leader Commercial Real Estate at Associated Bank offered his view saying “We shocked system intent curbing inflation not certain given enough time take hold” Mike Kamienski Partner Baker Tilly concluded “What happening interest rates inflations lack transaction activity cause concern – We know investors like do deals so don’t expect transactional activity last long.”
