How Will We Know If The CRE Market Is Slowing Down?

The Pandemic crushed the CRE Market and left many holders in the space faced to innovate. With a remote workforce agenda floating around the US Economy and many of the largest corporations taking a crack at stay at home work, how will the Commercial Real Estate Market recover with a market cycle on its way down? Let’s look into it. 

The residential housing market is on thin ice as rates have risen, traditionally the CRE market follows suit of the residential market after a 12-18 month timeframe. This is largely due to leasing obligations and companies slowly severing staff in the event of economic downturn or worse a recession. 

So when will we know the commercial market is slowing? The following will provide some guidance.

As noted, Commercial Real Estate prices and demand are visible to the naked eye 12-18 months after the Residential Market. That being said, if the Commercial Sector is in any trouble we should know soon. 

So what if there is a shift in the CRE Space, what will happen first? 

First, listing prices will diminish.

What flew off the shelves earlier in the year will take longer to lease or sell. Recall, our vacancy is at historic lows. So, this won’t happen next week. But, maybe an offering that generated multiple offers will settle for one or two.

Next, the owner ‘s motivation will shift. The longer a vacant building lays fallow, the more desire an owner will have to fill it.

Pricing will stabilize and then decline. With occupants on the sideline, owners will be forced to deal.