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CRE in 2023 Will Not Be Pleasant - Here's Why (Stay tuned for Part 2)

In this video I'll discuss what is driving some of the expected 2023 downturn in commercial real estate, and why you can still invest.

Next year is likely to bring a downturn for most asset classes in commercial real estate, according to CBRE's 2023 United States Real Estate Outlook, which predicts increased vacancy rates and curtailed demand followed by a rebound the year after.

Multi will continue to see some hard times with cap rates expected to increase further in 2023. Cap rates rose from 75 to 100 basis points this year, according to the report. CBRE predicts that rents will increase by 4%, and construction completions are expected to see a slight uptick but remain below the 20-year average of 5%.

In a nutshell - 2023 is going to be a year of headwinds. Values will come down, but if you take out the really steep 2021 trend, values won't be out of line. There is frankly still a housing shortage and pent-up construction demand that will bring the value trend back on positive footing. I am looking at deals in 2023! There will be some distress brought on simply because the debt markets are still so uncertain, not because the underlying rents and housing demands aren't there. While the big buyers from 2021 and early 2022 stop to catch their breath and spend time dealing with their purchases at the height of the market there will be opportunities for you and me.

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https://www.bisnow.com/national/news/economy/commercial-real-estates-2023-outlook-116881