2024 Real Estate Investment Conditions & Trends
- The ongoing interest rate stabilization and acceptance process is underway. The U.S. 10YT has hovered in the high 3%'s-4% range for several months and the CDN 10Y has been hovering around 3% during this time.
- Buyers/sellers/lenders are growing more conditioned to the higher interest rate environment. They are focusing less on micro-movements in monetary policy and more so on just recalibrating.
- On the buy-side, the focus will remain on income stability and growth potential, as opposed to aggressive interest rate and cap rate compression financial engineering strategies.
- Thematics Dominate: Niche sectors are capturing a growing portion of volumes, and we expect similar portfolio rebalancing trends to continue with a focus on data centers, seniors housing and student housing.
- Outside of office, demand across all property types is steady and fundamentals are strong. Regarding office, the vast majority of businesses across the Americas still see value in having their people come into the office at least part of the time and the work-from-home drag on office fundamentals is diminishing as most companies have already addressed their surplus space. Growing headcount will ultimately result in positive absorption and that will lead to higher quality buildings populating first with demand trickling down to decent quality buildings.
- Recoveries will likely look "v-shaped" in 2025 and 2026 as the lack of new supply across most property types sets a resilient stage for future income returns.
Check out our Q3 2024 Cap Rate Report to learn more.
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