2024 Predictions

The real estate and financial markets in 2023 could be defined as a year of uncertainty. Although many areas remained resilient and optimistic, some remained questionable. This coming year will likely prove to be another defining year for the industry and many asset types.

Here are five predictions for 2024 based upon our research:

1. Office conversions will remain a hot topic. With many properties increasing in vacancy, and several loans set to mature, converting unused space to different property types will once again be a popular solution to obsolete office space. Nearly half of office leases that were signed before 2020 have yet to expire which will likely lead to another hefty increase in vacancies.
2. The likelihood of avoiding a recession and having a soft economic landing is higher in 2024 compared to 2023. Many experts remain optimistic that inflation will continue to cool, and the Federal Reserve will decrease rates a handful of times throughout the year.
3. Rent growth amongst multi-family properties will continue to decline as the historic increase in supply continues with an estimated 600,000 units to be delivered by the end of the year. Although rent growth may decrease, occupancy will remain strong and around the 94% range.
4. The rise in AI will continue to alter current functionalities across every industry. Many day-to-day tasks will be made more efficient with the help of new systems. Some positions may be 100% automated, however many new opportunities will also be created. The demand for data centers to support the increase in technology will remain heightened.
5. As many commercial loans are set to mature throughout the year, 2024 may be the year of distressed real estate sales, especially surrounding unused office properties. Private equity funds hold over $100 billion, and potentially will start targeting urban areas with discounted distressed properties.

All real estate and financial markets are cyclical in nature. To remain successful and weather the storm, you must be able to navigate the uncertainty and adapt to current circumstances. At LPA we pride ourselves on monitoring current market trends and providing the most current and up to date data for our clients. Contact us today for any of your commercial real estate valuation needs.

Also, we invite you to share these insights with any of your colleagues who may find them of interest.