Timing out the CRE Waiting Game

As we draw closer to the end of the year, our economists start reflecting on the quarters past, and what factors we may see come into play next year. It’s certainly been an unusual year for Commercial Real Estate, where both pessimists and optimists have been met with surprises.  

Today we’re taking a holistic look at the CRE space and capital markets: what we’re seeing in the latest data, how we’ve gotten here, and what we might expect to see into the start of 2024. 

Zooming out to the Macroeconomy 

Everyone’s eyes are turned to the Fed, as the market awaits their next move. Federal Reserve actions are more important than ever, and the “higher for longer” denomination doesn’t appear to be disappearing any time soon. This new normal is causing trouble in the refi and transaction markets, which we’ll discuss later. 

Q3 Real GDP data continued to exceed expectations, growing at nearly two times the rate that experts predicted. This now marks four consecutive quarters of growth at or above the potential rate, which should bring some comfort to those in fear of a recession. Consumer sentiment data still shows concern, but households spending remained strong. Business investment also grew, partially in thanks to inventory growth in preparation for the 2023 holiday season.