Thank you to Jim Costello with MSCI Real Assets for presenting the 2024 Economic Forecast to a group of 250 at the Trade Hotel. Milwaukee real estate has once again been insulated from the extremes that are seen in larger cities.
A few takeaways from CARW Chairman Kevin Schmoldt:
– Deal volume declines in recent periods are (in part) a reflection upon the excess highs of ’21 and ’22
– Wisconsin, and Milwaukee specifically ate outperforming other areas of the Midwest. Notably, our area didn’t see the Q4 fall-off of deal volume witnessed in other sub markets.
– In 2022, Milwaukee was #62 in terms of #CRE deal activity and it climbed to #55 in 2023.
– Activity by listed REIT is down in every asset class.
– Activity by Private investors is showing the largest percentage gain and particularly in retail, office and senior categories. Activity by Private investors for multi-family, development and industrial is waning.
– Office. The headlines report doomsday. However, pricing trends in Milwaukee are down 8% (for what’s transacting) which is much better than other areas of the US.
– Industrial pricing is down about 2%, consistent with the national trend. However, given the decline in transactional volume it’s better than the data suggests, IMO.
– Forecasting distress. It doesn’t exist for Industrial. Multi-family is second to Office, based on adjustments in market pricing.
– 25% of current distress is retail, but interestingly only 15% of future potential distress. By comparison, 11% of current distress is associated with apartments but the category claims 29% of potential future distress.
– Foreclosures are still infrequent, whereas lenders and borrowers who delinquency or default are able to complete workouts.
– Performance of CRE assets and performance is going to be much more dependent on operations than in more recent years.
Photos from the event can be found HERE