Before we dive into the holiday season and prepare to wrap 2023 up, we wanted to provide you with an update on how various CRE sectors are doing:

Multifamily

• Due to housing shortages, a strong job market, and low housing affordability because of higher mortgage rates, multifamily continues to remain strong compared to other CRE sectors.
• Since student loan repayments restarted on October 1, the amount of residential mortgages is projected to decrease moderately, which means individuals who owe student loans are more likely to continue to rent.

Office Building

• There is a surplus of unoccupied office space amounting to 59.4 million square feet, surpassing the occupied space by a large margin.
• The office vacancy rate skyrocketed to one of its highest levels in the past decade at 13.3%.

Industrial

• With an influx of 525 million square feet of additional industrial spaces in the market, the industrial vacancy rate is 5.4%.
• A decline in demand has led to a moderation in rent growth, which now stands at 7.5%.

Retail

• Rent growth has reduced in the past year and is currently at 3.2%, but it is higher than pre-pandemic levels, indicating continued stability in the sector.
• The vacancy rate has maintained a steady level of 4.2% for five consecutive quarters, positioning it as the lowest among all CRE sectors.

Hotel

• Both business and leisure travel are witnessing a notable resurgence in popularity.
• The continuous rise in hotel demand has translated into higher occupancy rates and room rates equaling more than 13% in revenue per available room, with the average daily rate now standing at about 18% above pre-pandemic levels.

No matter what sector you prefer to work in, our team can help you get the creative capital you need for an upcoming project.

Drawing on our extensive structuring expertise and relationships with lenders and investors, we connect real estate owners and developers like you with the right debt and equity capital solutions for your unique needs. Contact our team today to discuss your project.

While current office vacancies are high, many industry professionals expect this sector to grow in the near future, according to a recent study by the NAIOP Research Foundation in conjunction with CBRE.

Here are a few takeaways from the study:

• Although hybrid work has increased, causing a decline in the amount of occupied space per worker, there is a greater demand for shared meeting and coworking space that allows occupiers flexibility to accommodate more employees on busier days. Many are willing to pay for these spaces on a per-use basis or through a provision in their leases. 
• Occupiers are looking for buildings that make commuting easier, with ample parking, access to public transit and on-site amenities.
• They also increasingly prioritize sustainable design features and access to outdoor space. 
• One-tenth of U.S. office buildings account for 80% of the overall increase in vacancy since the first quarter of 2020. These commodity buildings tend to be in high-crime areas, lack access to amenities, and are concentrated in markets that have been slower to return to the office. Other commodity office buildings are performing better than the average vacancy rates would suggest. 

With all of these factors in mind, our team is well-equipped to assist you in finding the ideal capital source for your next office project. From acquisition financing to construction financing and more, we are able to offer a variety of financing options tailored to your specific needs.

The Internal Revenue Service recently issued updated guidelines for residential projects that utilize the Section 45L tax credit to promote energy-efficient new construction. To qualify for this credit, properties must adhere to either Energy Star or Zero Energy Ready Home standards.

The Department of Energy aims to ensure that all newly built homes have low or no carbon emissions by 2035 and extend this goal to existing homes by 2050.

Steve Enfield

Managing Director

1 (425) 736-2780

steve.enfield@SoundviewCC.com

Mike Cassell

Vice President

1 (503) 330-8323

mike@SoundviewCC.com