In 2023, inflation and interest rates emerged as the twin pillars steering the economic landscape and, consequently, the dynamics of the commercial real estate sector. In pursuit of lower inflation, the Federal Reserve implemented multiple interest rate hikes throughout the year. One of the most direct effects of these higher interest rates was the increased cost of borrowing, affecting the profitability of new developments, the feasibility of certain projects, and the overall volume of real estate investments. As a result, for most of the year, nearly every commercial real estate market segment encountered a continuous rise in vacancy rates and a deceleration in rent growth. Read more in the full report below about the year-end results for the Office, Multifamily, Retail, and Industrial markets.
The full report from NAR is available – HERE