Market Insight: The Commercial Real Estate Market In Turmoil
Executive Summary
The commercial real estate market is being rocked by the current macroeconomic climate. Since the beginning of 2022, the MSCI World Real Estate Index has plummeted by 28%, and some properties have experienced valuation reductions of 50% as low office occupancy remains prevalent in an age of hybrid working.
It is not yet clear when the pain will stop: default rates are set to continue to rise, alongside central bank interest rates, while tenants continue to demand more from their workspaces to fulfil their net zero commitments. City planners, for their part, desperate to increase footfall, are expediting office transformations to other building use cases.
Smart building technology providers need to position their offerings to meet the key buyer demands of cost reductions through energy optimization, easy demonstration of decarbonization and ESG target compliance, and the creation of healthier workspaces to attract and retain talent. Vendors should look to this report to understand how they can capitalize in this real estate investment cycle, and best meet the needs of property owners and managers.
Table of contents
The commercial real estate market is in turmoilMultiple shocks have hit commercial real estate in the last three years
With only the tip of the iceberg showing, it’s not clear where the bottom will be
How can smart buildings technologies stay buoyant in these unchartered waters?
New realities will shape CRE investments for years to come
Vendors must look beyond CRE
Table of figures
Figure 1. Monthly US manufacturing construction spend/product price indexOrganisations mentioned
ADVANTAGE Investment Partners, Apollo Global Management, Brookfield Corporation, CBRE, Colliers, Credit Suisse, Deloitte, ETAP, Facilio, Federal Reserve Bank of St Louis, First Republic, Fitch Ratings, Google, HSBC, IES, Kastle Systems, McKinsey & Company, MSCI, Ofgem, Patrizia, SBB, Signature Bank, Silicon Valley Bank, US Federal Reserve, US National Bureau of Economic Research, US Securities and Exchange Commission (SEC)About the authors
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