M id A tlantic Real Estate Journal — September 2023 — 5D M id A tlantic Real Estate Journal — Fall Preview — September 2023 — 5D
www.marej.com
C ommercial R eal E state N etwork
By Hayim Mizrachi, CCIM, MDL Group/CORFAC International Recession concerns persist, but industrial and office CRE activity remains steady
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nflation and rising inter - est rates have affected the majority of CORFAC In-
first half of the year include a strong job market and favor- able hiring trends, return to work mandates by employers and improved delivery times for construction materials. Some markets are being impacted - both positively and negatively - due to com- pany and facility relocations. “Florida is rapidly growing at the expense of other states due to climate, taxes and the regulatory environment,” said a respondent. On the positive side, “Inter- est rates have stabilized, tour- ism has rebounded and many
workers have returned to their offices, though hybrid work policies appear to be the new norm,” a respondent said. Timing is Everything Economic conditions are driving most CORFAC mem- bers’ clients’ decisions, with the majority of survey respon- dents saying availability of capital and interest rates are major factors affecting trans- action activity. Local market factors such as availability of inventory, pricing and incen- tives are another major driver of client decisions. With market sentiment
cooling significantly in the first half of the year, the need for experienced local market expertise is more important than ever. One member noted, “As interest rates stabilize, and owners have more time to ac- cept new pricing based on the higher cost of or lack of debt, the gap between seller and buyer expectations will close.” To take advantage when that balancing act occurs, buy- ers and sellers alike will need help timing their business decisions to the inflation and interest rate curve. CORFAC brokers, who have deep exper-
tise in their local markets and access to shared intelligence from the network, can provide this valuable insight. Hayim Mizrachi, CCIM is principal of MDL Group/CORFAC Interna- tional and 2023 CORFAC International president. CORFAC International is a global network of pri- vately held commercial real estate firms special- izing in various aspects of the industry, including brokerage, investment, property management, and corporate services. MAREJ
ternational’s global mem- ber firms in the first half of 2023. Yet the industri- al/manufac- turing sector continues to fuel the pipe-
Hayim Mizrachi
line for more than three-quar- ters of respondents and the office sector fueled transactions for over half of respondents to the network’s Midyear 2023 Business Impact Survey. While macroeconomic trends are cre- ating significant repercussions in local markets, deals are still getting done. Amid concerns about infla - tion, remote work trends and bank failures, members ex- pressed a leveling of business activity compared to the latter half of 2022. Overall transac- tion volume increased for only 24% of respondents, remained about the same for 35% of respondents, and decreased slightly for 35% of respondents. Recession concerns spiked in the first half of this year with more than 70% of respondents expressing greater worry about the effects of an impending recession than at the end of last year. Inflation, remote work trends and high costs for construction materials are the other top factors negatively af- fecting commercial real estate overall, according to members. “Due to higher interest rates and concerns about a recession, investors are waiting on the sidelines for better times,” said one respondent. “Hybrid and remote work trends continue to shrink users’ space require- ments and the impact of this will become more visible in the coming months.” Sparse Yet Encouraging Reasons for Optimism A few bright spots the survey revealed are sources of new business, which include clients expanding, clients downsiz- ing, new companies locating to the market and members receiving referrals from other CORFAC members. More than 35% of respondents received an inbound referral from an- other member, a positive in- dicator of the network’s value for business development in challenging conditions. Positive dynamics affecting commercial real estate in the
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