Multifamily housing: Multifamily real estate is under pressure with the confluence of increasing expenses, higher capitalization rates and minimal rent growth impacting financial performance and driving down valuations. Operational efficiency regarding collections and controllable expenses will be more essential than ever while rent growth remains constrained.
Office: Low levels of demand for physical space continue to plague the office sector, as office vacancies set a new record. Several factors coupled with already high and increasing interest rates have also increased yield expectations, further hindering a recovery in the office sector.
Retail: Retail has weathered the storm of the pandemic and come out the other side stronger. As consumers continue to exhibit a strong desire for convenience and in-person experiences, we believe brick-and-mortar retail investors and owners are well positioned for success when the capital markets environment loosens.
Industrial: Industrial real estate remains among the strongest commercial real estate sectors as investors and owners continue to capitalize on low vacancies and high rent growth in 2023. These trends showed signs of cooling in the second quarter as new supply caught up to demand while consistent interest rate increases by the Fed have made transaction financing more challenging.
Capital markets: The second quarter was generally more of the same with depressed activity levels amid a generally tepid economic environment. Numerous factors are mildly encouraging including moderating inflation, continued strong employment figures and resilience in the financial sector.