Navigating Interest Rate Disruption for Better CRE Decisions (PwC Survey)

From Covid to an imminent economic downturn, the commercial real estate (CRE) landscape has seen no shortage of challenges. For instance, the annual Consumer Price Index (CPI) was projected to fall during 2022. Instead, by June, prices were up by 9.1%, the largest increase in 40 years. Making sense of these types of disruptions is essential for the CRE market. PwC’s recent investor survey is a free download that offers CRE professionals advice on using real-time investment data to handle any volatility. 

Here are some highlights from the survey, titled “Navigating Interest Rate Disruption: How real-time data can facilitate better CRE decisions amid volatility.”

1) Remote work leads to real estate reductions. Hybrid work appears to be here to stay, leading 45% of businesses to reduce their real estate footprints. Other workforce trends, like talent shortages, are also contributing to companies looking to trim office space expenses.

2) Cash flow assumptions have shifted. Rising interest rates, coupled with increased borrowing costs, have resulted in an average overall cap rate increase of 65% in the Investor Survey’s markets. Carrying assets for longer periods can help investors weather the elevated rates.

3) Commercial real estate still attracting capital. Because real estate tends to lag behind economic trends, access to relevant, real-time data can aid real estate professionals in staying ahead of these shifts to better navigate the market’s volatility.

4) Tech-enabled data provides valuable information. PwC’s Investor Survey is a digital hub filled with valuation data, insights, and trends that help the CRE community be more nimble in reacting to the latest trends. “When it comes to successfully navigating the current commercial real estate (CRE) landscape, investors are encountering numerous challenges. Now is the time to be proactive in procuring well-informed, tech-enabled investment resources.”

Download the full survey here.

Ginny Gaylor is an award-winning writer and editor based in Greensboro, North Carolina. She has more than 25 years of experience writing on a variety of topics from home furnishings to health care, hospitality to lifestyle. She can be reached through her website, ginnygaylor.com.