November 24, 2023 8:11am | 3 minute read
Real estate mogul Grant Cardone believes that successful people are motivated by fear.
“When you step outside your comfort zone, your brain is forced to create new pathways,” Cardon wrote in an August LinkedIn post. “When you start doing new things at a new level, you’re going to experience fear. There’s nothing comfortable about that.”
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Fear and greed are two emotions that are thought to drive markets, whether it’s stocks, residential or commercial real estate, and a recent study by John Barnes Research & Consulting found that multifamily, industrial The sentiments of industry players in the retail and office sectors are ascertained.
The Fear and Greed Survey, conducted jointly by Burns and CRE Daily, found that while many commercial real estate investors are on pause, they are still more greedy than fearful.
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The survey found that 28% of commercial real estate investors are currently increasing their exposure and 23% are decreasing their exposure. Nearly half said their best bet was to make no changes, citing funding issues and market volatility.
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The survey found that while investors are hopeful about the broader commercial real estate market, office investors are pessimistic, with 40% reducing their investment exposure. They blame remote and hybrid work, slow hiring and layoffs, and rising interest rates.
Opportunities in 2024 and 2025 will be lost as markets adjust to higher costs of capital while interest rates remain high and downside risks increase, particularly in office and oversupplied multifamily markets, Burns said. is expected.
“Low trading volumes obscure the extent to which values have fallen, but owners can’t escape market realities forever,” said a Texas investor who participated in the study. Ta. “Over the next 12 to 24 months, we will see a sharper decline in value than since the Fed began tightening monetary policy.”
Securing office space
Office landlords will face many challenges in the near term due to financing difficulties, falling values, rising vacancy rates, and a large number of maturing loans.
A lack of demand is impacting the amount of office space under construction. Nearly 31 million square feet of new office space began construction in 2023, slightly more than half the number of starts in each of the previous two years, according to Commercial Edge.
“The focus is on maturing loans and what happens to these buildings,” Commercial Edge director Peter Kolacinski said. “We expect this to be the beginning of functionally obsolete office buildings being removed from the market.”
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