As 2023 nears, real estate investors are increasingly concerned about a potential recession, according to a new survey. Lightbox, a commercial real estate data platform, found in its bi-annual Investor Sentiment Report that 90 percent of survey respondents were concerned about the potential for a recession. Those surveyed included commercial real estate professionals from brokerage firms, investment firms, and other real estate segments. About one-third of the survey’s respondents said they were “very concerned” about a recession, while 56 percent said they were just “concerned.” A small number, 10 percent, said they were not concerned at all.
Other findings from the survey, which was taken in August and September of this year, pointed to continued concerns about the impacts of rising interest rates, inflation and supply chain disruption on the industry. On the outlook for the rest of 2022, most respondents were not optimistic about real estate market conditions, but looking ahead to 2023, 42 percent of those surveyed said they were more optimistic. Recent market changes have also impacted hiring plans, with 80 percent of survey respondents saying rising interest rates, high inflation and other issues have impacted their hiring strategy. Forty percent surveyed said they are only hiring for high-priority needs, 30 percent said hiring plans from earlier in the year are now on hold “pending more clarity,” and 7 percent said they are reducing staffing.
Most economists have predicted a recession will take place next year, though not all agree exactly when during the year it will be. Some believe the recession is already here, pointing to two consecutive quarters of negative GDP, a definition devised in the 1970s and widely used since. The latest market reports show growth is slowing down, with office and apartment demand falling from previous quarters and investment sales volume declining for the first time since early 2021, according to Avison Young. While Federal Reserve officials are trying to get inflation under control without triggering a recession, it seems like the commercial real estate industry is hoping for the best and preparing for the worst.