ATLANTA – In the near future, the picture for commercial real estate appears “bumpy,” but CBRE’s projection for 2023 suggests that a soft landing may still be in the cards.
Challenges include stricter financing requirements and a likely economic recession, according to the Canadian Real Estate Market Outlook study, may weigh on investment.
The commercial real estate firm predicted one to two quarters of sluggish investment until springtime activity picks up.
Longer term, according to CBRE, real estate is being targeted by big investors, and the sector could benefit from greater interest rate certainty.
Due to this interest and increased merger and acquisition activity, commercial real estate investment in Canada might reach a record high of $59.3 billion this year.The Bank of Canada has frozen interest rates at 4.5 percent as it assesses their impact on the economy. With more clarity on interest rates, pricing expectations should be reevaluated in 2023, according to the group.
Jon Ramscar, president and chief executive officer of CBRE Canada, referred to 2023 as “the corrective year” after periods of high inflation and interest rate increases.
As we reflect back on the early days of the epidemic, we have a ton of lessons learned, thus Ramscar said there is reason for optimism.
The Bank of Canada has informed us all that inflation is beginning to taper back, that interest rate increases are complete, and that we may expect a midway increase in interest rates, which is really where the optimism lies.Office vacancy continues to increase, with demand for older space being replaced by interest in more modern locations. As companies balance their hybrid working arrangements for employees, the report said spaces that help attract workers back to the office will be a priority in 2023.
“Many forward-thinking tenants will use the coming year to relocate to properties with the best amenities, commute times and sustainability profiles,” the report said.
While some property owners have considered converting their real estate to residential, office spaces are more likely to be retrofitted or demolished.
