Bright Spots for CRE Investors

Jessica Fiur, Editor-in-Chief

“Reports of my death have been greatly exaggerated,” Mark Twain famously said. Similar sentiments can be said about an upcoming recession.

While there were rumblings over the past two years about a possible recession, the Fed is no longer predicting one for next year.

Phew.

Or not?

According to reporting by Jeffery Steele in “Where the Smart-Money Is Investing in CRE,” there continues to be an inverted yield curve, which is often a predicter of an economic downturn.

Though the capital markets still present challenging conditions, for investors, though, things could be looking up. And according to CBRE, cap rates are starting to level off.

“CRE investments are expected to recover starting in 2024,” Rajeev Hota of Acuity Knowledge Partners, sugested to Steele.

That doesn’t help right now, of course. And it is currently hard to predict the pace of investment. Yet there are still asset classes that are safe investments. According to Rob Finlay of Thirty Capital, industrial and certain retail properties are good bets, which echoes what CBRE reported.

And, investors, take note! We know office, the former golden child in the CRE industry, has struggled since the pandemic. But, according to Steele, for the first time in a year, office leasing volume has increased.

So it’s not yet smooth sailing. But if there is no recession, or at least not a major one, there may be great opportunities for those with patience.

“Next year, it’s going to get better,” Adrian Rahimi of Tricera Capital told Steele.

Read the September 2023 issue of CPE.