From the Editor: Uncertainty Looms Over CRE Markets

Summer 2023 Issue
By: Jennifer LeFurgy, Ph.D.
Jennifer image

Jennifer LeFurgy

“Stay alive until 2025” is becoming a familiar refrain as interest rates climb and credit markets tighten. Many in the industry see turbulence ahead, especially for office and retail properties.

Despite the strength of the industrial and multifamily markets, they have not proven immune. We hope to have a clearer picture of CRE fundamentals by September.

In this issue, we look at some lessons learned from previous economic downturns and see how office amenities have changed post-pandemic.

Stay informed,
Jennifer LeFurgy, Ph.D.



Notable facts and figures on the state of the commercial real estate industry, culled from media reports and other sources.



The total percentage of commercial real estate debt held by the 135 U.S. regional banks with between $10 billion and $160 billion in assets, according to a Moody’s report published in April. According to the Commercial Observer, that figure is important because it is “far less than 65% to 80% numbers some experts have asserted.” The Moody’s report notes that “CRE loans have less leverage, asset pricing has more cushion, and borrowers have a more diverse set of debt sources, which puts the CRE debt market in a relatively better position given a 2008-style bank liquidity crunch.”


The percentage increase in the number of commercial mortgage-backed securities (CMBS) loans managed by special servicers during the first quarter of 2023, according to research by Trepp. Those loans have a total value of $34.27 billion. A significant portion of this increase was driven by the office sector, where loans in special servicing now amount to $8.07 billion. That’s up 24% since the start of the year.



The U.S. office vacancy rate in the first quarter of 2023, which exceeds the peak rate seen during the 2008 Global Financial Crisis. According to an April report in the Wall Street Journal, “that figure marked the highest vacancy rate since data firm CoStar Group Inc. began tracking it in 2000.”


The percentage of workers in the Washington, D.C., area who are working from home at least one day a week, according to an April article in the Washington Post based on data from the U.S. Census Bureau’s Household Pulse survey. That is the highest percentage in the nation, and it’s largely fueled by the number of federal employees who telework, according to the article.



The total increase in demand for industrial space in 2022, according to JLL’s 10th annual U.S. Industrial Demand Study, published in late January. According to the report, the logistics and parcel delivery industry ranked No. 1 with demand for more than 194 million square feet in 2022. Additionally, demand in the automotive industry has risen by more than 156%, while demand from construction, machinery and materials companies grew by more than 41%.



The national retail vacancy rate in the first quarter of 2023, according to research from Cushman & Wakefield. It’s the best reading since 2007, according to the report, and it marked the eighth straight quarter of positive net absorption. Segments such as value retail, consumer services and ultra-luxury have performed especially well, the report notes. New York, Houston and Phoenix saw particularly strong demand.



The percentage decline in sales of rental apartment buildings in the first quarter of 2023 compared to the same period in 2022. According to an April article in the Wall Street Journal, that represents “the fastest rate since the subprime-mortgage crisis, a sign that higher interest rates, regional banking turmoil and slowing rent growth are undercutting demand for these buildings.” According to the article, only $14 billion in sales were recorded in the first quarter, the lowest figure since 2012.



Trillion Total vehicle miles traveled (VMT) in the U.S. in 2022, according to preliminary estimates from the U.S. Federal Highway Administration. While that is a 1% increase from 2021 and 9% higher than at the height of the pandemic in 2020, it’s 3% lower than VMT in 2019, according to a March analysis by the State Smart Transportation Initiative at the University of Wisconsin-Madison.

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Future NAIOP Events

  • I.CON Cold Storage, September 12-13, Atlanta
  • CRE.Converge, October 18-20, Seattle

For the most current information on upcoming NAIOP events, visit