The commercial real estate market continues to experience difficulty primarily due to the consistent rise in interest rates. As long as the Fed continues to raise rates, the commercial real estate market is going to find it more challenging to navigate.
Even though delinquency rates for the commercial market are at historic lows, they are still showing signs of spiking as vacancy rates have increased to an all-time high of 13.3% for August 2023.
The industrial real estate niche continues to remain strong, but demand is not as robust as it had been.
The increase in multi-family units has grown over the last 12 months, representing a 32% jump in the number of units delivered, as compared to 2022. The National Association of Realtors identifies the multi-family sector as one that is expected to remain strong with respect to other commercial real estate niches due to the shortage of available housing, a healthy job market and high mortgage rates.
Certain CRE metrics indicate that there is a huge surplus of nearly 60 million square feet of unoccupied office space reported in August 2023. This is a 23% increase year-over-year and there does not appear to be a rush back to the office.
The same report also indicates that there was a record high 525 million additional square feet of industrial space that came on the market. Even though the industrial vacancy rate is 5.4% and the rent growth increased to 7.5% there seems to be more supply than demand.
In the area of hospitality, demand has rebounded, and its increase is translating into increased occupancy and room rates. Right now the business and travel leisure sector of the commercial real estate market appears to be gaining ground with the demand growing and is expected to continue to increase through 2023.
If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.
Counsellors Title Agency,www.counsellorstitle.net,founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single-family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.
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