DLA Piper’s 2023 Real Estate State of the Market Survey

Commercial real estate, like most other investment classes, is experiencing the impacts of rising interest rates and recession risk which have created headwinds and an increase in bearish sentiment. But even in this uncertain environment, commercial real estate executives see areas of opportunity.

DLA Piper’s 2023 Real Estate Annual State of the Market Survey, conducted in March, uncovered a fluid landscape in commercial real estate.

In the 2022 edition of our survey, a wide variety of competing forces – from inflation to supply chain challenges and geopolitical uncertainty – influenced perceptions of the industry and its outlook for the year, but respondents generally were bullish.

For commercial real estate leaders today, the picture has changed: the Federal Reserve’s actions to curb inflation by raising interest rates – and the resulting increased cost of debt – are top of mind and causing concern about the commercial real estate market outlook.

With the exception of the survey that we conducted at the onset of the pandemic, 2023 marks only the second year since 2009 that our report has shown expectations for a bear market. In 2022, respondents overwhelmingly reported feeling bullish about the next 12 months, with that sentiment driven largely by an abundance of available capital and an overall positive outlook on the US economy. In 2023, the tables have turned: eighty-six percent of respondents are bearish about the next 12 months in commercial real estate.

But respondents also expressed optimism about specific areas of commercial real estate that may offer attractive investment opportunities. Our survey indicates that industry leaders see a balanced big picture in which, despite the recent challenges, there are opportunities.