Perception Gap Emerging in the CRE Market
Economic Indicators Show Strength Despite Recession Risk
- 1Q GDP data shows a 1.1% annualized growth rate in 2023, in line with the Blue Chip consensus forecast of 1.2% this year
- The U.S. economy also added more than 1 million jobs in the first 3 months of 2023, despite high-profile tech layoffs
KPI’s Are Strong for Most Asset Types
- When compared to pre-pandemic averages, most property types are recording stronger fundamentals in 2023
- Annual rent growth through 1Q exceeds the pre-pandemic average for all the major asset types besides office, with retail and industrial vacancy also lower in 1Q 2023
Office Presents Headwind, But Overall Outlook Bright
- Office vacancy is up nearly 370 basis points from its 1Q 2019 level, with rent growth below the pre-pandemic average
- The perception of a broad-based CRE reset being pushed by the media does not align with the current data, forming the perception gap in the market
*5-year period from 2015-2019; ADR growth for hotel
Sources: Marcus & Millichap Research Services, CoStar Group, Inc, RealPage, Inc.
Watch the Video Below