What’s Happening with CRE Supply and Demand?
What Supply and Demand Trends Mean for CRE Investors
Office and Retail Pipelines are Thin This Year
Both office and retail inventories are expected to grow by no more than 1% in 2023, but differing demand environments are propelling divergent outcomes
Office space demand has been low since 2019, while retail demand has surged, helping the segment record two years of downward moving vacancy and solid rent growth
Multifamily and Industrial Developers are More Active
Multifamily and industrial developers are forecasted to increase inventory by greater than 2% this year
There is good reason to believe the loan environment and construction shortages will delay some projects, diminishing the impact of 2023 construction on existing properties
Construction Pipelines Appear to be Tapering
With the interest rate on construction loans around 8%, new CRE construction starts are declining
The supply and demand outlook for apartments, retail, industrial and most niche property types remains promising
*Forecast for 2023
Sources: Marcus & Millichap Research Services, CoStar Group, Inc, RealPage, Inc.