A wide array of market forces, including inflation, interest rate hikes and return to the office are having compounding effects on commercial real estate in Chicago, across the U.S. and in global markets. The announcement that August inflation accelerated to 3.7% has caused further economic concern with more than 45 percent of real estate professionals being bearish on market conditions according to a 2023 Mid-Year Sentiment Report from DePaul/ULI Chicago .
Other headwinds include debt maturities, financial instability and inflationary pressures which have resulted in a significant decline in investment activity as well as values; over 75 percent believe a recession will happen by year-end with 45.3 percent expecting it be soft while 33.6 predict it will be hard landing for CRE markets globally .
In response Mary Ludgin , Senior Managing Director & Global Head of Investment Research at Heitman said “We are wrestling with inflation – The Fed made some really remarkable moves over the past year but I fear they may have overshot leading us into slow growth or recession” Steven Weinstock , Senior Vice President & Regional Manager at Marcus & Millichap added “It’s easy to speculate that if the Fed had taken an earlier aggressive posture then everyone would be better off now” Greg Warsek , Executive Vice President & Group Leader Commercial Real Estate at Associated Bank commented “We shocked system with intent curbing inflation yet we may not given enough time for this take hold” Mike Kamienski Partner Baker Tilly concluded saying “What’s happening is cause for some concern however we all know investors like do deals so don’t expect lack transactional activity last too long”.
