Why the Outlook Is Positive for Those in CRE

There have been a lot of challenges this year, but there’s a lot to be happy about in commercial real estate.

Jessica Fiur, Editor-in-Chief
Jessica Fiur, Editor-in-Chief

There’s a lot to be anxious about right now in the commercial real estate market.

There are declines in office demand, an elevated cost of debt and long lead times for electric equipment, which is creating a challenge powering buildings.

Lions and tigers and bears, oh my, indeed!

But despite some challenges, there is also much to be excited about. In Associate Editor Jordana Rothberg’s article, “CPE’s Midyear 2024 Roundtable,” Jason Muss of Muss Development said that now is a great time to get into CRE.

“The fundamentals of most sectors are still strong … so if you can find a deal that pencils out, you’re likely to make your numbers in the longer run,” he explained.

According to Matthew Astrachan of JLL New York, despite (or because of) many employees still working from home, you can get great terms on a lease for a Class A office space. Currently, landlords are competing for tenants and upgrading buildings and amenity spaces.

Looking ahead, there are reasons for optimism, as well. According to Richard Barkham of CBRE, office leasing is picking up and should continue to strengthen. Additionally, Gina Baker Chambers of MCB Real Estate predicts that the dislocation of valuation in the public markets versus the private markets will continue. “There are several publicly traded REITs that are trading at a material discount to private market net asset values,” she told Rothberg.

And, of course, if you have the right mentality, you can go far, even in a challenging market. “Personality, reputation and negotiating skills will all go further than they have in years,” Muss said.

Read the July 2024 issue of CPE.