DLA Piper’s 2024 Real Estate State of the Market Survey

Commercial real estate industry leaders report measured optimism for 2024, due in part to an anticipation of stabilized or declining interest rates, an expectation of increased investment opportunities, and cautious optimism about the US economy.

The uptick in bullish outlook follows two years of dramatic pendulum swings in sentiment, according to DLA Piper’s 2024 annual Real Estate State of the Market Survey. While bearishness is still the prevailing outlook, the 2024 DLA Piper survey reflects a notable uptick in positive sentiment compared to 2023, when 86 percent of CRE leaders were bearish.

Interest rates are the largest driver of both optimism and concern for CRE leaders in 2024. Among bullish respondents, the stabilization (28 percent) and lowering of interest rates (20 percent) were the top two reasons that respondents expressed optimism about the CRE market over the next 12 months. For those more bearish, interest rates were also the most common reason (31 percent) for concern. But that number is markedly down from 2023, when 46 percent of bearish respondents attributed their pessimism to interest rates. The survey was taken before the Federal Reserve’s decision on May 1 to hold rates steady following higher than expected inflation numbers.

Respondents generally believe transaction volume will increase in 2024, and the potential for an improved economy, coupled with investment opportunities surrounding distressed assets, is among the top five reasons cited for optimism in the year ahead. However, with an estimated $1 trillion in commercial real estate debt coming due before the end of 2025, an overwhelming 96 percent of respondents believe that challenges with refinancing existing debt will have an impact on the industry in the next 12 months.

Respondents also report that they regard data centers as the most attractive asset class. In addition, while significant opportunities remain in growth markets outside the traditional gateway cities, sentiment for gateway cities is rebounding.

On balance, the results of this year’s DLA Piper State of the Market Survey indicate a growing sense of cautious optimism and measured opportunity in the commercial real estate market for the upcoming 12 months.