U.S. Real Estate Market Outlook 2023
Opportunities Amid a Slowing Economy
December 13, 2022 55 Minute Read
A Challenging Year Ahead
High interest rates and a recession will make 2023 a challenging year for commercial real estate. Though inflation eased in late 2022, it was still running at more than 7%. The Fed will continue raising rates until it sees a marked reduction in inflation nearer to its 2% target. Weakening fundamentals and higher cost of capital will generally lower asset values.
The recession will not be particularly deep. Corporate finances are in good shape and employers will shun excessive layoffs to avoid losing employees in a tight market for skilled labor. While consumer confidence is highly subdued, average household debt is low compared with the onset of previous recessions. These factors suggest a moderate downturn, with unemployment unlikely to breach the 6% level. Inflation will be significantly lower by the second half of 2023, setting the stage for falling interest rates and the beginning of a new cycle that will last to the 2030s.
Despite economic headwinds, the pace of change will not ease. ESG considerations and the growth of the digital economy will continue to affect real estate demand. Hybrid working offers many benefits for businesses and employees, but companies and the office sector will have to evolve. Cities too will need to adjust to new commuting patterns and reduced office demand. The resurgent retail sector is just now reaping the benefits of a long period of change, which is attracting keen investor interest. Data centers and industrial real estate will probably be the most resilient sectors and the housing shortage will benefit the multifamily sector. The hotel sector’s recovery from pandemic restrictions will continue but life sciences activity, which was turbocharged by COVID, will ease for a while as venture capital becomes scarcer. All sectors in all places will be required by governments, occupiers and investors to make significant decarbonization efforts.
Our 2023 outlook details the major trends that will dominate the year. Should you have any questions about how these trends may impact your specific real estate strategy, please don’t hesitate to contact us.
Global Chief Economist & Global Head of Research
Richard Barkham, Ph.D.
Global Chief Economist, Head of Global Research & Head of Americas Research
Senior Vice President, Global Head of Occupier Thought Leadership & Research Consulting
Henry Chin, Ph.D.
Global Head of Investor Thought Leadership & Head of Research, Asia Pacific
Vice President, Global Head of Industrial & Logistics Research
Americas Head of Multifamily Research, CBRE
Dennis Schoenmaker, Ph.D.
Executive Director | Principal Economist, Econometric Advisors
Achieve better outcomes through innovative property sales, debt & structured finance and real estate investment banking solutions.
Use the world’s most comprehensive real estate services platform to find innovative solutions for your needs as a corporate occupier or office investor.
With integrated solutions, unique insight, and unmatched experience, we deliver successful outcomes for retailers, restaurateurs, investors, owners, a...
We represent the largest industrial real estate platform in the world, offering an integrated suite of services for occupiers and investors.
Unlock the potential of your residential real estate with expert investment, financing, valuation, due diligence, design, management and leasing strat...
CBRE Hotels delivers bottom-line impact to hotel clients globally by providing advisory, capital markets, investment sales, research & valuation s...
Optimize your data center real estate with worldwide consulting, advisory and transaction, project management an...
Remove carbon emissions from your portfolio through programmatic and technical solutions.
- Report | Adaptive Spaces
Cross-Generational Attitudes That Will Transform the Built Environment
November 28, 2022 35 Minute Read
Delve into insights from more than 20,000 people spanning generations—from baby boomer to Gen Z—on how they will live, work and shop in the future—and the impacts on real estate.
Slow Ride: PwC’s Carlock & CBRE’s Barkham on where CRE is going in 2023
January 4, 2023 39 Minute Read
What’s in store for commercial real estate in 2023? Find out what Byron Carlock, PwC’s U.S. Real Estate lead, and Richard Barkham, CBRE’s Global Chief Economist...
- Report | Intelligent Investment
UK Real Estate Market Outlook 2023
December 7, 2022 96 Minute Read
Discover actionable intelligence on the trends shaping U.K. commercial real estate in 2023.
- Report | Intelligent Investment
2022 Mid-Year Global Real Estate Outlook
August 8, 2022 42 Minute Read
CBRE Global Research experts share their views on what’s in store for the global economy, office, industrial, retail, multifamily and capital markets for 2022 and beyond.