2023 Outlook: Us Commercial Real Estate
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US commercial real estate performance is responding to higher interest rates and prospects for a weaker economy in 2023. The impact affects the demand for space as shown in absorption, vacancy rates, and rent growth along with the valuation of property as shown in cap rates. The initial impact in the second half of 2022 was concentrated in diminishing property transactions as buyers and sellers weighed expectations. The outlook for 2023 advises caution as prospects differ widely across property sectors and geographies. We believe the cycle downturn will be least severe for sectors and geographies that enjoy structural tailwinds.