Bisnow hosted its annual “State of the Commercial Real Estate Market” today in Orange County – a super event!
Top Takeaways for those watching #CommercialRealEstate trends:
Mall Mania:
Redeveloping/Repurposing mall properties is bringing success to cities. In OC, MainPlace Mall is a standout as one of California’s first mall-specific development projects with shovels in the ground.
Grocery Gains:
Cap rates are above debt costs in grocery-anchored product, spurring investment and even new development in some markets, according to Tom Lawless of Hines.
Alternate Strategies:
Many large institutional investors, like Cindy Chen of Nuveen Real Estate are keen on self-storage, medical office, and life science in 2024.
Penciling Takes Work:
Deal metrics are still tight – it’s a lot of work to close right now. Those who are active say it’s ESSENTIAL to have strong long-term capital relationships. On that note…
Alternative Financing is the Name of the Game:
Carrie Nikols, owner of a private debt fund, says “the floodgates have opened” since the Fed’s indication that rates may reduce this year. Her firm has already closed more deals in January than in all of 2022 combined! The panel also discussed seller financing as a major trend of 2023.
Communications More Important Than Ever:
My favorite trend of the bunch! Panelists confirmed that communications is a critical priority for CRE and Finance companies, especially in times of distress.
Construction Costs Still Trending Up:
While costs stabilized in 2023, they are expected to increase by another 3-5% by the end of 2024.
Office Lives and Evolves:
Trophy A+ assets are performing well. Class B and C space remains unclear.
Legislation Brings Opportunities:
AB1449 opens up new opportunity at sites that meet affordable requirements.
SB4 allows for new opportunities across religious sites and higher education facilities.
ESG:
There continues to be investor pressure to make buildings more sustainable.
Those are the highlights – thank you to all the panelists for great insights into the dynamic #CommercialRealEstate market. Ready for a successful 2024 ahead!
