The commercial real estate market is still reeling from the aftermath of the pandemic—and 2023 was a particularly bad year for the sector. Last fall, Julie Whelan, CBRE’s global head of occupier research, told Fortune that it was no secret how bad office vacancies were: a 30-year high at around 18%. At the same time, there was a dramatic undersupply of multifamily properties. Could this crucial sector, so pivotal for the recovery of downtown office districts, be facing better odds in 2024? The Magic 8 Ball has a cloudy outlook.
In a report released Thursday, the National Association of Realtors (NAR) said inflation and mortgage rates were the “twin pillars steering the economic landscape and, consequently, the dynamics of the commercial real estate sector.” There is optimism here, as inflation rates started at 6.4% in January 2023, and dropped to 3.1% by the end of the year, while mortgage rates peaked at a whopping 8% in October and then also came down slightly. But even though the current 30-year fixed mortgage rate has dropped to 6.76%, that’s not enough juice for the troubled commercial real estate space.
