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The Altus Group's latest Sentiment Survey offers a revealing snapshot of the commercial real estate industry. As we discuss in today's email, the survey highlights a mixed outlook with both opportunities and challenges. Despite a strong desire for transactions, price adjustments remain a sticking point. Expectations of a brief recession and potential Fed rate cuts add to the market's complexity.

Join us for a Propmodo Live webinar on July 9th to explore multifamily strategies for H2 2024. As residents' needs and preferences evolve, property owners and managers must innovate to stay competitive. Experts from JLL, Defigo, Veritas, and Propmodo will share insights on innovative management, effective lease negotiations, and future market trends. Discover how to attract and retain residents and enhance property value in the changing multifamily landscape.

This week in Propmodo Technology, we delve into the challenges of site selection. Environmental, zoning, and infrastructure issues can quickly derail deals, especially in redevelopment scenarios. These complex hurdles can be challenging, time-consuming, and costly to overcome. For developers and real estate acquisition teams, a basic understanding of environmental, zoning, and infrastructure assessments, along with effective risk management options, is crucial for securing and maximizing prime locations.

Now, let's dig in!

New Altus Survey Shows Mixed Sentiment Within the CRE Industry

The Altus Group is a technology and advisory firm that provides services like the popular ARGUS valuation software to the commercial real estate industry. Twice a year, they survey their clients, which include some of the largest asset and fund managers in the world, to understand the conditions they are experiencing and their outlooks for the future.

The recently released Sentiment Survey, which surveyed 227 leaders from 49 firms, provides an interesting snapshot of the industry. The report reveals a prevailing sentiment that there are both positives and negatives in the current situation. The majority of respondents believed that a recession was somewhat or very likely within the next six months, but most also thought that the recession would be “shallow and short-lived.”

There seemed to be a desire to make deals, with eighty percent of those surveyed indicating plans to transact rather than just hold. But, there was also strong support for the notion that sellers are not yet lowering prices to levels where buyers find them reasonable. Retail, industrial, and single-family properties were viewed as “fairly priced” by the majority of respondents, while office, hospitality, multifamily, and life science properties were seen as mostly overpriced.

Interest rates were reported at around 7.5 percent, with little difference between 5- and 10-year notes. Rates were also the number one priority for executives, with insurance prices taking the second spot for the first time. The market is signaling an expectation that the Fed will pursue one rate cut this year, which, in theory, should push real estate prices higher. But, it is hard to imagine that happening since the market doesn’t seem to think that prices have dropped enough to reflect the current economic situation.

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Overheard

Propmodo Technology: Site Selection

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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