2024
Investor Survey INVESTOR EXPECTATIONS SNAPSHOT
Soft-Landing Recession
Downturned Market for Longer Than a Year
No Rate Hikes
Increased Cap Rates
Market outlook Where will the 10-Year Treasury Fall in the First 6 Months of the Year?
Economic Predictions for 2024 Hard Landing Recession
17.1% 1.99% or Lower
1.9%
2.00% to 2.99%
4.6%
3.00% to 3.99%
55.6%
4.00% to 4.99%
35.2%
5.00% or Higher
2.8%
Recovery/Solid Growth
15.3%
Soft Landing Recession
67.6%
67% OF INVESTORS PREDICT A SOFT- L ANDING RECESSION
Duration of Downturned Market
1-3 Months
8%
4-6 Months
6-9 Months
20.5%
33.9%
Longer than a year
37.5%
37% OF RESPONDENTS BELIE VE THE MARKET WILL BE DOWN FOR LONGER THAN A YE AR
0%
75.2%
End of 2024
10.6% ™
Early 2024
8.0%
20% 30% 40% 50% 60%
OVER 50% OF INVESTORS BELIE VE THAT IN H2 2024 THE 10 -YE AR TRE ASURY IS EXPECTED TO FALL BET WEEN 3.00% AND 3.99%
Rates Will Increase In… No Rate Hikes
10%
Mid 2024
6.2%
INVESTORS EXPECT NO R ATE HIKES IN 2024
W W W. M AT T H E W S . C O M
Commercial Real Estate FUNDAMENTALS % SHIFT IN INVESTMENT PRIORITIES L AST 12 MONTHS End of Year 2023
Increase
Mid-Year 2023
Increase
22.3%
Unchanged
15.7%
50.0%
Unchanged
45.5%
Investors increase focus on opportunistic strategies in 2024
Reduced
17.0%
Reduced
26.1%
Frozen
10.7%
Frozen
12.7%
Cap Rates are Anticipated to Increase in the Next 6 Months Decrease
None
12.4%
Opportunistic Increase
Value-Add
36.6%
Core-Plus Core 0%
10%
20%
30%
40%
% of Survey Responses Based On Investment Strategy 2022
2023
2024
Remain The Same
38.9%
Regions Investors are Targeting MIDWEST
16.2%
WEST
NORTHE AST
SOUTHWEST
SOUTHE AST
21.6%
8.1%
14.4%
39.6%
™
W W W. M AT T H E W S . C O M
In 2024, CRE Sales Activity Is Expected to Improve While Leasing Activity Will Remain the Same As 2023 SALES ACTIVIT Y
LE ASING ACTIVIT Y
Improve
Improve
Remain the Same
Remain the Same
Worsen
Worsen
Unsure
Unsure 0%
20%
40%
60%
0%
20%
40%
60%
Impactful Technology Within the Next 5 Years Artificial Intelligence
Blockchain
Online Marketplace and Listing Services
Virtual and Augmented Reality
3.8%
60% 60% OF INVESTORS BELIE VE ARTIFICIAL INTELLIGENCE WILL MAKE A MA JOR IMPACT ON CRE OVER THE NEX T 5 YE ARS.
26.7%
3.8%
Cybersecurity
5.7%
office Fundamentals in 2024
What do you believe will happen to outdated office buildings?
20%
Converted to other uses
15% 10% Stay as they are
5%
20%
0% Rents Increase
Occupancy Rates Transaction Volume Remain Consistent with 2023
™
Decrease
Renovated and repurposed for the modern workforce
40%
20%
Conversions and adaptive reuse will dominate
20%
W W W. M AT T H E W S . C O M
Retail Fundamentals in 2024
Outperforming Subsectors for 2024
30% 20%
Grocery
Automotive
Restaurants
Superstore
38.2%
10%
8.8%
0% Rents Increase
Occupancy Rates Transaction Volume Remain Consistent with 2023
Decrease
GROCERY WAS THE # 1 SELECTED SUBSECTOR TO OUTPERFORM IN 2024.
32.4%
2.9%
Distribution & Medical
17.6%
INVESTORS BELIE VE CONSUMER SPENDING WILL BE ONE OF THE MOST PRE VALENT RETAIL TAILWINDS IN 2024, WHILE INFL ATION WILL BE THE MOST PRE VALENT HEADWIND.
Community Shopping Centers
Optimal Retail Location for the Next 5 Years
™
Retail Strip Centers Suburban Centers
W W W. M AT T H E W S . C O M
Industrial fundamentals in 2024
Industrial Subsectors to Outperform in 2024
20%
Data Centers
15%
33.3%
10% 5%
Rents Increase
Occupancy Rates Transaction Volume Remain Consistent with 2023
Decrease
23.3%
E-commerce Fulfillment Centers
Distribution
Freight
3.3%
Refrigeration & Cold Storage Buildings
16.7%
Industrial outdoor Storage
10.0%
0%
Warehouse
10.0% 3.3%
Multifamily fundamentals in 2024
CL ASS B WAS THE SELECTED SUBT YPE TO OUTPERFORM IN 2024.
30% 20% 10% 0% Rents Increase
Occupancy Rates Transaction Volume Remain Consistent with 2023
Subsectors to Outperform in 2024
Decrease
Class B
Class C
Class A
Single Family Rentals
Built-to-Rent
Student Housing
42.9% INVESTORS BELIE VE THAT INTEREST R ATES WILL BE THE MOST PRE VALENT MULTIFAMILY HEADWIND IN 2024.
14.3%
21.4%
14.3%
4.8%
2.4%
What Interested Investors the Most in 2023 Retail
19.9%
Multifamily
27.6%
Industrial
Self-Storage
6.6%
Shopping Centers
4.9%
13.3%
Healthcare
4.4%
None
3.8%
Land Development
2.2%
Office
2.2%
Other answers included: SFR/BTR, flex, gas stations, grocery-anchored retail, trailer parks, mixed-use, mobile home parks.
™
W W W. M AT T H E W S . C O M
D I S C L A I M E R : This information has been produced by Matthews Real Estate Investment Services™ solely for information purposes and the information contained has been obtained from public sources believed to be reliable. While we do not doubt their accuracy, we have not verified such information. No guarantee, warranty or representation, expressed or implied, is made as to the accuracy or completeness of any information contained and Matthews Real Estate Investment Services™ shall not be liable to any reader or third party in any way. This information is not intended to be a complete description of the markets or developments to which it refers. All rights to the material are reserved and cannot be reproduced without prior written consent of Matthews Real Estate Investment Services™.
™
W W W. M AT T H E W S . C O M