What Long-Run CRE Deal Flow Trends Mean For Investors in 2023
The Forces Restraining Transaction Flow
- The Fed lifted rates by 300 bps in a 140-day span, forcing CRE investors to recalibrate their investment underwriting and strategies
- While the rapid rise of debt capital costs slowed deal flow, interest rates remain below their long-term average; as investors acclimate, activity could revive
Since 2000, Investment in CRE Has Risen Dramatically
- The retreat in transaction volumes in 2022 is negligible within the context of the sector growth over the last 2 decades
- In this time, CRE investors have navigated numerous down cycles only to return stronger
What Will It Take For Transaction Velocity To Rise?
- Investors have become increasingly sophisticated, information has improved dramatically and capital has become more prolific
- CRE investing has become more mainstream, bolstering deal flow during both upcycles and downturns
Includes apartment, retail, office, industrial, hotel and seniors housing sales $2.5 million and greater
Sources: Marcus & Millichap Research Services, Real Capital Analytics
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