Commercial real estate is on the rebound! Recent reflections by Ben Breslau, Chief Research Officer at JLL, bring attention to this encouraging trend. This green sector experienced a major retreat earlier this year due to macroeconomic jitters. Now, it has set the stage for continued, step-by-step enhancement. Breslau cautioned that recovery would likely be slow in coming. Still, he looks for momentum to build during the second half of the year.
The commercial real estate market has been struggling since the beginning of the year, mainly due to overall economic uncertainty. According to recent data, borrowing costs and property values have largely stabilized across the majority of markets. This stabilization seems to be setting the stage for a rebound in the sector.
Breslau highlighted that “with no shortage of liquidity, institutional investors are returning to the market with more capital sources and a renewed appetite for real estate.” Collectively, this surge of investment has the makings of supercharging our current recovery. Investors are moving to a much more positive view as growth starts to appear.
Retail — one of the main pillars of commercial real estate — is looking a little brighter than this time a year ago. Even as the sector has been in retreat these past few months, the fundamentals of performance for the sector seem to be standing strong. Tariffs have already done disastrous damage to the retail sector. Stability Despite Inflation Though asset valuations remain stable, the market as a whole remains stable.
Further elaborating on the state of the market, Breslau noted that “the attractiveness of CRE investments as a long-term store of value remains intact.” He thinks an increasing number of investors are creating a “risk-on” mentality. As long as debt markets remain robust, he believes commercial real estate will continue to attract capital.
Diana Olick, creator of the CNBC Property Play newsletter, which focuses on emerging opportunities for real estate investors, acknowledges the gradual recovery taking shape within the sector. Regardless of the dip in investor sentiment earlier this year, asset valuations have held up rather strongly, she points out. This resilience speaks to just how confident investors are that commercial real estate will continue to outperform in the years ahead.
As the second half of the year progresses, industry experts expect that commercial real estate activity will gain further momentum. With stabilization in borrowing costs and asset values, along with a favorable investment climate, stakeholders in the real estate market remain cautiously optimistic.