Link to Article: Report: Data Suggests That CRE Continues Holding On What exactly does "holding on" mean? If you do not have time to read the entire article, allow me to extract and apply the relevant.
"Just-released Q2 2023 preliminary multifamily, office and retail data from Moody’s Analytics CRE supports the commentary that the worst of fears have yet to ring true.”
Good News, now let's get more lenders back in the game.
"The combination of decreasing office utilization, retail challenges and apartment demand erosion led the Board of Governors of the Federal Reserve System to highlight commercial real estate as a possible economic risk trigger."
When the Federal Reserve Board highlights a potential risk, banks take notice and adjust accordingly. I thought we had good news, what else did Moody's say?
“The industry is still on a knife’s edge.”
Hold on.... How are the different property types doing?
"Multifamily is still holding strong... the national average vacancy rates remained at 5%, with construction delivery a bit more sluggish than expected... still, net absorption had ticked up."
Positive, how about retail?
“Surprisingly strong pent-up demand (has) brought the opportunity for retail performance to turn the corner. Neighborhood and community shopping center performance continued to improve. Vacancy levels stood at the pre-pandemic level of 10.2%, while asking and effective rents increased slightly on a quarter-over-quarter basis."
Another good sign, should we push our luck and look at office?
“Office demand remained unstable and continued to bump along the negative territory. The average national vacancy is at 18.9%, uncomfortably close to its historical peak of 19.3%."
Unstable is better than crashing, in fact little has changed over the past quarter.
Since the only certainty is uncertainty right now, I suggest we show up each day, stop overthinking, and act with positive intention. What else can we do, just hold on.
Contributed by: Kyle Nagy
Kyle Nagy is a founder and Director of CommCap Advisors. Kyle started his commercial real estate career in 1999 as the Real Estate Analyst for the Las Vegas office of GMAC Commercial Mortgage, an international real estate finance company. Prior to leaving and forming CommCap, Kyle was instrumental in the growth and success of the Las Vegas GMAC office and was one of the youngest Vice Presidents within the company. During his finance career, Kyle has successfully originated, underwritten, and closed over $900 million in loans with Life insurance Company, Wall Street Conduit, Bank and Agency Lenders.
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