Our 2023 Business Leaders Outlook: Commercial Real Estate highlighted the top issues driving up costs for the industry. Our Agency Lending team will review options with multifamily property investors based on their goals, such as fixed-rate terms of 10 years and longer on a 30-year amortization loan. JPMorgan Chase is a licensed agency lender, offering affordable and market-rate multifamily financing through Fannie Mae® and Freddie Mac. But B- and C-class office buildings-especially those located with shorter leases outside prime locations-face challenges as the workplace evolves.ĭespite economic uncertainty, commercial real estate investors can capitalize on several opportunities in the coming months. Office properties with leases of 10 years or more may be able to ride out the market correction. Still, A-class properties are performing well. Office space still up in the air: Remote and hybrid work have largely reduced demand for office space. ![]() The rate rose 10 basis points in the first quarter of 2023 to 4.2%. The vacancy rate for distribution and warehouse space was 4.1% throughout the second half of 2022-a record low, as the rate has steadily declined each quarter since the end of 2020. While the asset class remains healthy, it may be starting to soften. Industrial may be stabilizing: Fueled by e-commerce and an everything-on-demand economy, industrial has been booming for years.For example, trips to the nail salon, barbershop and sports bar are still standard. There are still services that favor or even require in-person visits. The strength of retail: E-commerce accounts for roughly 15% of retail, but that doesn’t mean consumers can get everything online.Efforts may include finding creative ways to preserve, build and finance affordable housing-the primary focus of the firm’s Capital Solutions group-and working with public entities to create zoning variances that allow greater density in residential areas. A multipronged method to growing the housing supply is critical moving forward. Increasing affordable housing: The country’s affordable housing supply continues to lag far behind demand.Vacancy rates vary widely across metro areas, but the median vacancy rate nationwide is 3.9% as of April. The national vacancy rate for multifamily was at 4.5% at the end of 2022, according to Moody’s Analytics, even as the rate of rent increases fell. Multifamily rental costs rising more slowly: Multifamily properties are still going strong.While the future of the office is unclear, commercial real estate has remained resilient in the first half of 2023. This leaves investors with a familiar feeling: uncertainty.Ĭommercial real estate trends across asset classes It’s unclear if rates will continue to rise or if the Fed will change course in the second half of the year. ![]() Many commercial real estate owners still pay rates lower than current levels, so refinancing activity has slowed. Rates have risen at the fastest pace in decades, and it’s taking investors time to adjust. Between March 2022 and May 2023, the Fed raised interest rates 10 consecutive times.
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