The best time to acquire commercial real assets is “when things are at the bottom” and “that was six months ago.” That was one conclusion delivered by Spencer Levy, CBRE’s Global Client Strategist and Senior Economic Advisor, at NAIOP Maryland’s annual Capital Stack event.
Speaking one day prior to the presidential election, Levy said that “from an economic perspective, there will not be a tangible difference no matter who wins, because the power wielded by the President is overstated.”
The person with the greatest influence on the economy is Federal Reserve Chairman Jerome Powell, Levy said. Powell, a lawyer, was extremely careful when timing the interest rate reductions recently because he did not want to appear to be influencing the election, Levy said.
Levy speaks in a different city almost every day and, leading up to the election, he always conducted a straw poll with the audience to gauge their prediction of the winner. Recently, the results favored Donald Trump with about 75 percent of the vote, he said. At the NAIOP Maryland event, Trump earned 80 percent of the hands raised.
Levy’s other observations and comments included:
- Nearly two-thirds of the global economy is related to consumption and, with the older demographic purchasing less items, we could see an overall reduction in product sales.
- Foreign investors have become less active in the purchase of commercial real estate assets in the United States.
- Overall investment sales have decreased due to the high cost of debt, the lack of available capital sources, global geopolitical issues, and sticky inflation.
- CBRE forecasts short-term interest rates to continue to fall from its current 4.69 percent level. Projections are 3.13 percent next year, 2.67 percent in 2026, and 2.44 percent in 2027.
- Real gross domestic product is projected to increase 2.6 percent this year, 1.7 percent next year, 1.8 percent in 2026, and 2 percent in 2027.
- According to national political consultant Frank Lunz, commercial real estate companies should change the way they refer to themselves to soften their image and win more battles with local government officials and consumers. He suggests CRE companies should call themselves “builders” instead of “developers.”
- Spurred by the decrease in interest rates this year, investment sales are expected to significantly increase in 2025. The breakdown of buyer categories includes private – 62.8 percent; institutional – 18.9 percent; REITS – 6.8 percent; cross border – 6 percent; and other – 5 percent.
- Several major cities are reeling when it comes to office vacancies, particularly San Francisco, which has a 37 percent vacancy rate.
- The No. 1 amenity commercial office building landlords can offer to attract tenants or encourage people to return to the office is other people. This is significantly more effective than installing pickleball courts or golf simulators, or offering free lunches.
- Commercial real estate is a labor and demographic business. It is a derivative of where people are and where they want to be.
- Locally, more than 7.3 million square feet of industrial space was leased in the greater Baltimore metropolitan region in the first three quarters of 2024, compared to 8.9 million square feet during the same time last year.