{"id":7311,"date":"2022-11-15T15:07:07","date_gmt":"2022-11-15T21:07:07","guid":{"rendered":"https:\/\/nwfl4sale.com\/nars-commercial-2023-forecast-small-price-drop\/"},"modified":"2022-11-15T15:07:07","modified_gmt":"2022-11-15T21:07:07","slug":"nars-commercial-2023-forecast-small-price-drop","status":"publish","type":"post","link":"https:\/\/nwfl4sale.com\/nars-commercial-2023-forecast-small-price-drop\/","title":{"rendered":"NAR\u2019s Commercial 2023 Forecast: Small Price Drop"},"content":{"rendered":"
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Overall, high interest rates may lead to a nationwide price decline \u2013 but that will vary by local market. Strong job growth should support prices in many markets.<\/span><\/span><\/p>\n<\/div>\n ORLANDO, Fla. \u2013 Commercial real estate prices may see a slight decrease nationwide in 2023, but strong job growth will continue to drive demand in many markets, according to National Association of Realtors\u00ae (NAR) Chief Economist Lawrence Yun.<\/span><\/span><\/p>\n Yun joined other real estate experts at the recent \u201c2022 NAR NXT, The Realtor Experience\u201d convention in Orlando. The group discussed economic trends and issues affecting the commercial real estate industry.<\/span><\/span><\/p>\n \u201cNationwide, we are beginning to see some decline in commercial appraisal values,\u201d Yun said. \u201cCap rates simply cannot match up with higher borrowing costs, especially among people who need to refinance their properties. However, strong job growth is supporting prices in many markets.\u201d<\/span><\/span><\/p>\n Yun said that the recent spike in interest rates combined with high borrowing rates forced up cap rates and caused property values to adjust downward.<\/span><\/span><\/p>\n \u201cOffices are the most vulnerable to these price decreases,\u201d he said. \u201cWe\u2019re seeing a rise in office vacancies in many cities, driven by a preference for remote work. San Francisco, for example, saw a 6% office vacancy rate before the pandemic. Now, it\u2019s more than 15%.\u201d<\/span><\/span><\/p>\n Matt Vance, senior director and America\u2019s head of multifamily research and senior economist for CBRE, estimates that employees will spend 25-35% less time in the office than they did pre-pandemic.<\/span><\/span><\/p>\n \u201cThat\u2019s about a day to a day and a half less in the office,\u201d Vance said. \u201cWe believe this will translate to a 15% reduction in office space demand per employee.\u201d<\/span><\/span><\/p>\n Vance noted that multifamily properties have provided an annual average total return of 8.8% over the last five years. He also said that multifamily offers critical benefits beyond returns.<\/span><\/span><\/p>\n \u201cIt\u2019s easier to place large amounts of capital [in multifamily],\u201d he said. \u201cIt\u2019s also the best inflation hedge among these sectors, and it\u2019s been the most stable sector over the past 40 to 50 years.\u201d<\/span><\/span><\/p>\n Danny Nix, Jr., CCIM, a commercial broker with The Nix team at Coldwell Banker SunStar Commercial, spoke to the crowd about natural disasters and their economic effect on commercial real estate. He said natural disasters bring in many groups to provide aid and services \u2013 such as restoration companies, electricians, and disaster relief teams \u2013 and these groups will need help finding commercial properties.<\/span><\/span><\/p>\n \u201cIf you know in advance that a big storm or natural disaster is coming to your area, it\u2019s important to get ahead of the ballgame,\u201d he said. \u201cAfter a disaster strikes, Realtors become an important resource for these groups.\u201d<\/span><\/span><\/p>\n Source: National Association of Realtors\u00ae (NAR)<\/span><\/span><\/p>\n \u00a9 2022 Florida Realtors\u00ae<\/span><\/span><\/p>\n<\/div><\/div>\n <\/p>\n <\/p>\n