6D — December 23, 2022 - January 19, 2023 — Year in Review 2022 — M id A tlantic Real Estate Journal
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Y ear in R eview 2022
Higher deal volume in 2022 is a sign of positive momentum in the marketplace CORFAC members brace for inflation impacts, but continue to close deals
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at current conditions and macroeconomic trends. In- flation and rising interest rates were by far the most worrisome, with 60% of CORFAC members saying these factors will have the most negative effects on CRE transactions into the new year. One responding member said that interest rate in- creases have “created short- term need and long-term confusion and degradation of deals under consideration.” They have also contributed to lower valuations and higher cap rates. Another member explained, “Sellers are seeking prices that do not reflect the higher cost of financing and thus what buyers can finance.” Optimism is dampening About 44% of CORFAC members said business sen- timent in their local market was somewhat positive, but 30% described it as neutral and only 3% said it was very positive. That’s a downward trend compared to earlier this year, when half of CORFAC members described overall business sentiment in their market as somewhat positive and another one-third said it was very positive. What would improve these numbers again? A quar- ter of respondents want to see GDP or economic growth. Improved delivery of construction materials would also help, said 14% of those surveyed. Some cite a challenging political environment for businesses in states like New Jersey contributing to decreased CRE deals, too. Brokers are bracing for a tough year ahead. “The impacts of interest rate increases will be felt next year. Cap rates will have to rise or sellers will have to hold. Many projects will end up on hold due to the new challenging lending environment,” said one re- spondent. However, in an economic environment like this, the need for experienced and lo- cal market-savvy advice is more important than ever. Buyers and sellers alike will need help to time their moves to the inflation and interest rate curve, and CORFAC bro- kers can provide the needed insights. MAREJ
the first half of the year. Higher deal volume in 2022 is a sign of positive momentum in the marketplace, but bro- kers are spending significant time advising clients on how to navigate these conditions. With a great deal of capital sitting on the sidelines, many brokers are advising clients to wait for interest rates to stabilize or prices to match the market. Challenging Rate and Pricing Environment CORFAC brokers were asked what their great- est concerns are looking
s worries deepen about the impacts of infla- tion and rising inter-
International in Detroit, MI. “Our survey shows that our brokers understand their mar- ket dynamics and are focused on continuing to deliver deals.” Where deal activity is originating Many CORFAC members –76% – are seeing new busi- ness from existing clients who are expanding, showing continued growth from 70% of members surveyed earlier this year and 63% at this time last year. In addition, 59% are get- ting new business from clients relocating to the market, also growing from nearly 50% in
est rates, a majority of CORFAC In- ternational’s global mem- ber firms saw business sentiment neutralize in their mar-
last year, with 17% enjoying significantly increased deal volume, according to the or- ganization’s fall 2022 business sentiment survey. “In a tightening economy, the intra-network connections and on-the-ground knowledge CORFAC members bring to their clients is paramount,” said 2022 president Mason L. Capitani, SIOR, principal of L. Mason Capitani/CORFAC
Mason Capitani
kets after a positive upswing earlier this year. Despite this, more than 62% of respondents experienced greater trans- action volume compared to
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