From CNBC: 2024-10-18 07:00:01

The Federal Reserve’s interest rate cutting cycle has spurred optimism for commercial real estate, giving long-awaited positive momentum. Lower rates make debt cheaper, accelerating deal flow in a market previously stalled by higher borrowing costs. Sales are recovering, with an increase in transactions, improved property valuations, and a potential for a broader market rebound.

While the office sector shows modest improvements, challenges persist with rising vacancies and supply outpacing demand. Net absorption has turned positive since 2022, yet headwinds such as hybrid work and low demand continue to impact the sector. Price levels remain below pre-pandemic levels, creating a longer road to recovery.

On the other hand, the multifamily sector is experiencing increased demand and stability with the highest net absorption in almost three years. Demand is driven by factors like apartment availability, concessions, and more manageable rent growth. With stabilizing vacancy rates and favorable market conditions, the outlook for the multifamily sector remains positive in the near term.



Read more at CNBC: Commercial real estate recovery may be uneven