In response to inflation, the Federal Reserve recently raised interest rates to alleviate some consumer pressure.
Couple this with increased prices for just about everything, and the commercial real estate industry is bound to feel limited by the current economy.
Now, analysis from MSCI Real Assets shows that commercial real estate property sales fell by 16% in April compared to the same time one year ago after “13 consecutive months of increases.”
However, sales varied across various commercial real estate sectors. For multifamily and industrial buildings, sales are flourishing as companies expand their regional footprint and businesses face high demand that requires more warehouse space.
Investments into commercial real estate follows demand, and these two sectors are leading the industry. Still, the market remains volatile. In March, sales within commercial real estate jumped 57% year-over-year.
As the threat of a recession keeps businesses on their toes, companies within commercial real estate are navigating their next step forward if demand falls.
Lessons can be taken away from the tech industry, which has recently been slammed with a slew of layoffs, hiring freezes, dwindling revenue, and more. This could certainly lead to decreased prices for buildings, which may be good news for businesses struggling to compete.