Peter Harris and Julia Sheean from Commercial Property Advisors (CPA) discuss the outlook of commercial real estate for the year to come in the US. See the summary of their forecast:
2024 Interest Rates: Predictions suggest that interest rates will likely drop in 2024. The forecast attributes this potential drop to an election year strategy, anticipating a move by the president to boost the economy and secure re-election by lowering interest rates.
Multifamily Market Stability: Expectations are that the multifamily market will remain strong in terms of pricing and rents. The analysis points to the continued demand for rental properties, driven by high home prices and economic factors, leading to an increase in long-term renters.
Impact of Maturing Multifamily Loans: The market may witness distress in the multifamily sector due to maturing loans, with an estimated $49 billion worth of loans set to mature in 2024. The prediction suggests potential opportunities for investors as distressed properties become available, particularly in value-added deals.
Dynamics of Other Real Estate Sectors: Self-storage and industrial flex space are anticipated to perform well in 2024. The self-storage sector is expected to benefit from downsizing trends during economic uncertainties. Industrial flex space, driven by the growth of e-commerce, is seen as a strong investment.
Office Market Challenges and Opportunities: The office market faces challenges, with high vacancy rates, especially in C-Class office buildings. However, opportunities may arise in repositioning and upgrading A-Class office buildings, requiring significant capital investment.
2024 Economy and Consumer Sentiment: Consumer sentiment is noted as a crucial factor in the economic outlook. The analysis suggests that the average consumer might feel hesitant or fearful about the economy. Despite this, the overall sentiment is seen as an opportunity for commercial real estate investors to capitalize on potential deals.
Investment Wisdom: The advice for investors in an uncertain market includes actively seeking opportunities, becoming a continuous learner in real estate, and seeking mentorship or professional guidance. The emphasis is on making informed decisions, especially in a market with potential opportunities for those who are well-prepared and strategic.
Focus on Income, Appreciation, and Depreciation: The key focus for investors in 2024 is on investments that provide a combination of income, appreciation, and depreciation. This three-pronged approach is highlighted as crucial for long-term wealth building and financial success.
Closing Remarks: The video concludes by urging viewers to focus on opportunities in 2024 that align with the principles of income, appreciation, and depreciation. The overall tone remains optimistic, labeling 2024 as the “Year of Opportunity” for commercial real estate investors.