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Beth Mattson-Teig

Beth Mattson-Teig is a freelance business writer and editor based in Minneapolis. She specializes in commercial real estate and finance topics. Mattson-Teig writes for several national business and industry publications and is the author of numerous white papers.

Demand for industrial space has pushed vacancies to historically low levels. But the high tide may no longer be lifting all boats. A surge in new supply along with a growing appetite for more modern facilities is putting more pressure on the sector’s aging building stock. Legacy buildings are having a tougher time keeping up with the changing demands of today’s space users.
Potential trouble brewing in a sector that has been viewed as relatively bulletproof multifamily sector is concerning. But while stress is very much real, industry participants are quick to point out that the overall foundation for multifamily remains strong. “The cracks that we’re seeing are not structural; they’re superficial,” says Vincent DiSalvo, chief investment officer at Kingbird Investment Management, a family office investment firm specializing in multifamily.
The latest troubles at New York Community Bank have some observers wondering whether it could be a canary in the coal mine for the broader regional banking sector. Regional banks are definitely in a tough spot due to deposit flight, higher funding costs, and concerns about problematic commercial real estate loans. But, at least for now, troubles seem to be limited to a few isolated cases, rather than systemic.
The strain of higher interest rates is creating sleepless nights for some commercial real estate owners and operators these days. On the flip side, there is significant capital eagerly lining up to take advantage of market dislocation.
Uncertainty around asset prices likely to slow transactions.
Commercial real estate investors are hitting refresh on stodgy investment strategies and sending more capital flowing into alternative property sectors. Portfolio managers that were once laser-focused on traditional property sectors are expanding strategies to include bigger allocations beyond the typical mix of office, retail, industrial, and multifamily assets.
Real estate market participants are in the midst of a “Great Reset” when it comes to adjusting views related to pricing, risk, and return expectations in an environment marked by higher interest rates and slower economic growth. The need to align thinking and strategies to fit current market dynamics is one of the key themes in the 2024 Emerging Trends in Real Estateforecast for the United States and Canada.
Many office property owners are heading for the exits amid weaker demand and looming debt maturities, while opportunistic private equity groups are leaning in to capture what could be once-in-a-generation buying opportunities.
“Higher and slower for longer” is one of the major trends highlighted in the newly released Emerging Trends in Real Estate® 2024 report.
Although deals are still getting done, it is a tough market to find capital to fund acquisitions and development, and the need to deleverage maturing loans in a higher rate environment is fueling concerns about rising commercial real estate loan stress. That challenging market is evident in slumping transaction activity.
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