No Match Found
Commercial real estate deal activity continues to moderate in the face of challenges caused by shifts in monetary policy to combat inflation, including several interest rate hikes by the Federal Reserve that have increased borrowing costs. The subsector is also being severely affected by the ongoing evolution of how people live, work and play in a post-pandemic world.
Further, general declines in credit availability and a continued disconnect in buyer and seller valuation expectations in some areas of the market, including office, are bringing a capital market-driven wait-and-see dynamic, despite solid fundamentals.
Despite these challenges, we believe the sector is not in a crisis, as successful dealmakers will find opportunities, with green shoots evident across all subsectors, including the much-maligned office subsector.
Transaction volumes in the first quarter of 2023 were down across all subsectors compared to the red-hot comparative period in 2022.
In addition to these core subsectors, data centers, wellness real estate, student housing, self-storage and life sciences are becoming subsectors in their own right as they gain relevance and prominence as institutional property types.
Companies face markets being reshaped by technology and disrupted by geopolitical unrest, a global pandemic and economic shocks. As a result, CEOs are turning to transformative acquisitions to reposition and reinvent their businesses for long-term success. Companies are also beginning to crack the code on how to make big, transformative deals successful: leveraging experience, early and sustained investment in integration, and a commitment to creating and implementing new long-term operating models.
Learn more about leading practices and transformational mindsets in PwC’s new M&A integration report.
“The real estate deal environment has been significantly impacted by shifts in monetary policy and ongoing changes associated with a post-COVID world. However, we continue to see significant opportunities for patient and creative market participants who are willing to take the long view.”