Throughout the United States, the pipeline is well distributed
“With the exception of a couple of markets where supply is very concentrated, the pipeline is fairly well dispersed geographically,” Vance said. “There is a housing shortage within the United States, and because it is most vital within the single-family home market, multi-family buildings play an important role in the general housing supply on this country. The emptiness rate just surpassed 4% at the tip of 2022 will support a rise in health rents – not much like what we’ve got seen in the previous few years, but above the typical 2.5% to three% rent increase we experienced within the years just before pandemic.”
Moderator Julie Whelan, CBRE’s Head of Tenant Research for the Americas, responded: “We should remember, even with multi-family, that if growth is moderate from past levels, it’s still in a superb place historically.”
The state of the office market
Jessica Morin (pictured right), research director at CBRE, referred to the state of the office market in 2023.
“Current structural and cyclical changes are crucial for each tenants and owners and can affect demand forecasts this 12 months,” she said. “The structural change is already visible. The physical occupancy of office buildings has probably not modified much since Labor Day, and nothing really indicates a serious change, at the least within the near term. Potentially, if we were to see significant layoffs in white-collar employees, it could give employers more leverage to force more days within the office. We’ve seen some big layoffs announced within the tech sector, and this is admittedly the sector that has most embraced hybrid work. For this reason, the sector has really limited space in the previous few years. The technology sector has already been the primary driver of office leasing, so it has a big impact on the health of the office market and it’ll definitely be a sector that we are going to proceed to look at because it shapes our prospects.”
The cyclical changes are big
“As we enter a recession, corporations will look to chop costs and forestall unnecessary spending,” Morin said. “That is why real estate leaders intend to make use of office occupancy data to eliminate underutilized office space. Both of those forces influence decisions about space, and recently downsizing and relocation were among the many top 10 questions asked. Leasing figures already reflect this, with the typical lease size last 12 months being 18% lower than in 2018 and 2019. But interestingly, although it’s smaller, last 12 months we recorded more transactions than in 2018 and 2019. Well, so what? it tells me that the uncertainty of structural change that’s beginning to undermine this wait-and-see strategy will probably not be a 2023 strategy.”