CRE UNCERTAINTY AHEAD - DELOITTE'S 2023 FORECAST

Unsurprisingly, global real estate leaders have mixed expectations for the year ahead. A new survey of 450 commercial real estate leaders offers these insights: 40 percent say revenues should increase. While 48 percent see revenues decreasing. Just 12 percent expect no change.

As you might expect, last year's survey results were much more optimistic: 80 percent expected revenue increases in 2022. Now, however, 33 percent of respondents are planning to cut costs compared to last year when just 6 percent were planning cost cutting.

What has these industry professionals spooked?

• Inflation

• Workforce management

• Supply chain issues

• Currency volatility

• Cyber risks

• Climate-related regulatory issues

• Public health mandates

• Industry preparedness for uncertainties

Deloitte offers some advice in their report. First, leverage third parties to assist with back office functions. Second, consider innovative technology partners to enhance differentiation from competitors--examples include: smart contracts, tokenization and innovations developing in the "metaverse."

Meantime, a key barometer observed by us all is simply lending rates, which have doubled since early 2022. For brokers, a slipstream in the market remains all-cash 1031 tax deferred exchange investors, those folks who are impervious to the spike in lending rates.