Local CRE market growth driven by migration, office returns, and stable rates
In its first member survey of 2024, CORFAC International heard from brokers of independently owned firms that deal volume is steady and improving. The survey revealed 31% of respondents saying deals have remained the same, 31% saying volume has slightly increased, and 10% saying it has significantly increased.
More than 51% of respondents reported inbound referrals from existing clients or local allied service providers, highlighting CORFAC member firms’ strong reputation for service and local market expertise – even during times of market volatility. In addition, nearly one-third of respondents reported transaction activity that originated as a referral from a fellow CORFAC member.
“We’re pleased to hear from our members that deal volume is trending positively and that referrals continue to be an important source of new business,” said 2024 president David Boyd, CCIM, SIOR, principal of Boyd Commercial/CORFAC International in Houston. “Our network is built around the valuable cross-market connections between members, their clients, and trusted local service providers.”
Sources of Deal Activity and Growth
The industrial sector continues to generate the greatest share of business activity for respondents, with 62% citing warehouse/distribution as a top driver and 58% citing industrial/manufacturing. Office transactions, investment sales and retail deals rounded out the subsectors fueling the pipeline for member firms.
CORFAC members also shared the bright spots they’re seeing across their markets. The top three factors positively influencing local CRE market activity are population migration to their markets (59%), return to office mandates (48%), and stabilizing interest rates (48%). The growth of healthcare real estate is a cause for optimism mentioned by multiple respondents.
“We’ve had activity from doctors looking for owner-occupant space as well as expanding medical groups,” explained one member.
Pushing through Economic Concerns and Lagging Deals
On the flip side, still-high interest rates and inflation are having the most negative effects on transaction activity, according to 83% of members. Even so, some players seem to have adjusted to this environment: “Investors are stomaching higher interest rates, and banks are thawing their lending practice.”
Time to work through deals is wearying some brokers. “Transactions seem harder to conclude, each project needs more time and effort on our side,” said one respondent. Another added, “Clients are waiting for ‘things to get better’ to make decisions.”
These challenges underscore the importance of working with a collaborative and flexible network like CORFAC. With deals taking significant time and effort to conclude and uncertainty around securing financing, deal participants need real estate advisors who can navigate the ins and outs of their local markets and bring buyers and sellers to a satisfying agreement.
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