M id A tlantic Real Estate Journal — December 2023 — 15A
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M id A tlantic R eal E state J ournal Optimism prevails with high hopes for 2024 CORFAC year-end survey depicts continued instability
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ORFAC Internation- al’s year-end 2023 survey of members
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office sector is poised for the most change in 2024. Return- to-work mandates will continue to have an effect, but as leases come due many office clients are still looking to sublease excess space. “We also expect creative repurposing of aging office space in our market,” a respondent noted. The investment sector is likely to be active in the new year as well. “There is a po- tential levelling of significant capital value declines over the last 18 months providing good value for money,” said a respondent. Stabilizing inter- est rates should also ease the worries of some buyers, fueling more investment activity in the coming months. Referrals Highlight Network Benefits Sources of new busi - ness remained steady from early in the year, including clients downsizing, clients expanding, new companies lo- cating to the market and busi- ness won from competitors. In addition, 26% of respondents received an inbound referral from another CORFAC mem- ber since mid-year, a positive indicator of the network’s val- continued on page 18A
Recession Concerns Decrease, but Other Worries Persist
in its global network re- vealed mixed feelings about the state of commercial real estate in local markets. De- spite economic uncertainty and inflation causing 67% of respondents to report lower transaction volume than earlier this year, local market business sentiment remains positive for over half of respondents. Several markets, repre- senting more than 40% of those surveyed, are benefit - ing from inbound business and population migration. For example, New Jersey has been a big beneficiary of job growth in the greater New York area. The sectors fueling business activity for many CORFAC members shifted slightly in the latter half of the year. The warehouse/distribution sector fueled the transaction pipeline for over 67% of respondents, bumping industrial/manufac- turing into second place. Retail, office and investment sales rounded out the top five sec - tors contributing to members’
Recession worries eased among respondents with about half expressing concern, down from 70% who expressed con- cern earlier this year. When making real estate decisions, members say their clients also cite interest rates and lack of available financing as road- blocks. “Inflation and rising interest rates have significantly impacted our small business owner clients’ ability to tap into lower interest financing,” one respondent said. Yet inflated costs for con- struction materials and work- ers’ reluctance to return to the office continue to hamper activ - ity overall. “New construction developments are under pres- sure or being cancelled due to high construction and material costs,” explained one member. “Companies and individuals are still resistant to returning to the office,” another respon - dent added. “The return-to- work pace has been much slower than expected.” Looking Ahead to 2024 Survey respondents said the
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