Based on new market forecasts by global property consultant CBRE, U.S. economic growth will continue to slow in 2024 and commercial real estate transaction values will decline further, creating compelling buying opportunities, according to the company’s 2024 U.S. Real Estate Outlook.
CBRE’s economists anticipate that resilient consumer spending will counter economic headwinds next year including high interest rates and near recessions in Europe and China. CBRE predicts the U.S. unemployment rate rising slightly to 4.5% and an easing of inflation that will allow the Federal Reserve to reduce short-term interest rates to around 4.25% by the end of 2024 and to 3.5% in 2025.
This anticipated economic bottoming out and initial rebound will affect all sectors of commercial real estate. CBRE sees lending remaining tight, property values declining further in the first half of the year before activity rebounds in the second half, a topping out of office vacancy, and a wave of multifamily construction.
“There is a bit more real estate pain ahead, but stabilization and the early stages of recovery aren’t far behind that,” said Richard Barkham, CBRE Global Chief Economist and Global Head of Research. “Investment volumes will be down overall for 2024 but will start an upturn in the second half. And leasing activity will pick up a bit from a sluggish 2023.”
Here is CBRE 2024 U.S. market outlook for multiple property sectors:
