U.S. CRE Market is Sluggish

The WSJ reports that institutional investors have yet to warm back up to purchasing commercial real-estate (CRE.) While investors hang onto their CRE holdings, deal activity remains weak. Returns in the CRE sector have been below investor expectations, specifically in the apartment and office sectors, and while this can be largely attributed to the pandemic – with U.S. CRE down 17% from 2022 highs – investors also underestimated how much capital it would take to renovate aging properties. Some investors are using the CRE slump to snag buildings at a discount, with the hopes that, as supply tightens due to sluggish building rates, landlords will have the power to raise rents again in the future. 

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