Where does President Jon Paley see the market headed into 2023?
Up or Down? Commercial Real Estate faces a great deal of uncertainty in the coming year. Inflation shows small signs of slowing down but still remains high. The Federal Reserve continues to raise interest rates as they did once again this December by fifty (50) basis points. With the monetary supply shrinking, many lenders are tightening the reins on new loans due to concerns of dropping rental rates which in turn will result in declining values. The tightening financial conditions will have a direct impact on commercial property prices making it more expensive for Investors to finance new deals or refinance existing loans, thereby lowering investment in the sector.
Paley Commercial Real Estate offers “Free Property Evaluations” that dissects every faucet of your investment and comes up with a proactive plan of action which will provide a Commercial Property Owner a successful road map moving forward.
The Current Commercial Real Estate Market is still in a recovery mode resulting from the damaging effects of Covid. Although the industrial sector remains quite strong, Amazon has put several “new” warehouse projects throughout the country on hold, signaling an impending slowdown. Retail and Office have experienced some stabilization; however, both sectors have not yet approached their pre-pandemic levels. This is particularly true with office space, as employees want to work from home, resulting in higher office vacancy rates. In addition, the ever-expanding e-commerce marketplace has negatively affected retail, as customers prefer to shop on-line. All of these factors has had a downward impact on commercial real estate prices.
Paley Commercial still experienced a banner year in 2022 by utilizing our vast knowledge of the marketplace, coupled with our creative marketing techniques. This has resulted in our ability to close transactions many other firms could not.
Future Market Conditions in the coming year remain questionable due to the various factors mentioned above. Lease inventory is slated to remain fairly high, as many companies will be in holding patterns while continuing to layoffs employees. Mom and Pop business are also more cautious and may not expand. Commercial Investors are anticipating additional interest rate increases which will result in soaring borrowing costs. Goldman Sachs predicts a 20% drop in values coupled with a looming recession. Many Commercial Property Developers have already pushed back new projects beyond 2023, as rising labor, fuels, and commodity costs hit Commercial Tenants extremely hard.
President Jon Paley has nearly four decades of commercial real estate expertise and has experienced several different commercial real estate cycles. This allows Jon to offer Commercial Property Owners a unique perspective on the marketplace many of his competitors cannot.
Paley Commercial Real Estate Expertise is among the highest rated of any Commercial Real Estate Brokerage company in the Los Angeles area. Experience the Paley Difference by contacting our Woodland Hills office.