CRE expectations mixed for cost of capital, dealmaking in second half of 2024

Article originally posted on Phoenix Business Journal on July 1, 2024

The outlook among commercial real estate industry players remains mixed as 2024 officially hits its midway point.

A second-quarter survey of industry representatives by Altus Group found slightly more respondents were concerned about the possibility of a recession compared to the prior quarter, but a greater share felt better about debt capital availability.

While about half of the respondents said they didn’t anticipate a recession in the near term, the number of individuals who said they did expect a recession soon increased by seven percentage points compared to Altus’ first-quarter survey. Additionally, many respondents believe the U.S. capital environment will remain a challenge, with 49% saying they expect interest rates will remain stable in the next year, but 40% of respondents saying they felt the cost of capital will increase in the next year.

possible interest-rate cuts in 2024. That outlook has since dimmed, with the Federal Reserve deciding to hold off on cutting rates until inflation moves closer to the agency’s 2% target.

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