top of page
  • Writer's pictureStacy Patrick

August Commercial Real Estate Newsletter

What's in this issue?

> What's in store for CRE in the second half of 2023? > What's driving subruban office demand? > 5 fastest-growing cities for millionaires

What’s in store for CRE in the second half of 2023? Midway through 2023, forecasts of a recession have started to cool, but challenges remain for the commercial real estate market. In June, economists at Goldman Sachs indicated that a recession in 2023 is “much less likely,” with a 25% chance of one occurring in the next 12 months — an improvement from their March projections of 35%. The Federal Reserve also signaled optimism about the U.S. economy by declining to raise interest rates. CRE’s top challenges in 2023 Despite these trends, uncertainties persist for much of the commercial real estate sector.

  • Higher interest rates and the elevated cost of construction materials continue to dampen plans for new developments.

  • Multi-family, industrial and neighborhood retail are the healthiest segments, according to JP Morgan, but B- and C-class office buildings are not out of the woods yet.

  • Tightening lending policies at small and regional banks may continue to obstruct access to commercial loans.

What’s next for CRE? For the remainder of the year, Lawrence Yun, Chief Economist of the National Association of Realtors, expects office vacancies to continue accumulating, while the square footage of multi-family projects continues to rise. Should the Fed raise rates, he projects a 27% decline in commercial real estate transactions by the end of 2023. Still, weaker prices should translate into opportunity for those with deeper pockets, he adds. Despite these obstacles, Fed chair Jay Powell predicts short-term repercussions for CRE, the banks and economy, due to well-distributed risk and an overall resilience to absorb losses. ​​​​​


What’s driving suburban office demand? It goes without saying that office vacancy rates are soaring as the new work-from-home model transforms how we live and work. Surprisingly, suburban offices are somewhat bucking the trend, with vacancy rates at 11% compared to national trends of 21%, according to statistics cited in Commercial Property Executive. In fact, a revival of these office spaces is on the horizon as companies eye available properties as their new home base. So what makes these properties attractive to workers and companies? Versatility: Large office complexes offer flexibility to house single tenants as well as a mix of tenants. Shorter commute: As people relocate away from urban centers, workplaces in the suburbs are attractive options for full-time and hybrid employees who desire work-life balance. Amenities: The larger campuses can easily accommodate sought-after upgrades like retail, technology, food and fitness, lending these the look and feel of bustling urban centers. Access to green space: The proximity to trails and natural features, along with the larger footprint to build dedicated green spaces, make suburban offices vibrant and restorative places to work.



5 fastest-growing cities for millionaires Also included: Millionaire population and millionaire growth rate in the past decade. ​​​​​​​

  1. Austin: 30,500 and 102%

  2. West Palm Beach: 9,400 and 90%

  3. Scottsdale: 13,900 and 88%

  4. Miami: 38,000 and 75%

  5. Greenwich and Darien, Connecticut: 11,900 and 72%

©2023 Century 21 Real Estate LLC. All rights reserved. CENTURY 21®, the CENTURY 21 logo, and C21® are registered service marks owned by Century 21 Real Estate LLC. Century 21 Real Estate LLC fully supports the principles of the Fair Housing Act and the Equal Opportunity Act. Each office is independently owned and operated.

6 views0 comments


bottom of page