The world is shrinking, at least the commercial real estate world is. According to a new report, the professionally managed global real estate market shrank in size by 4.1 percent in 2022, dropping to $13.3 trillion from $13.9 trillion in 2021. MSCI authored the report and attributed the drop to a decrease in local market sizes as a result of macroeconomic challenges. But as global real estate contracted, the United States real estate market increased, holding on to the top spot with a market size of approximately $5.4 billion, marking a 40 percent share of the global market. China remained a distant number-two in rankings with a market size of $990 billion.
The U.S.’s strong standing may come as a surprise given the stifling consequences of the high interest rate environment, recession fears, and economic uncertainty, but the strong dollar and a slowdown in other markets buoyed the nation’s real estate market. Challenges aside, the size of the U.S. real estate market has been on a steady upswing since 2009. Despite the poor performance of the office sector, the U.S. real estate market continued to show solid strength on the global stage in 2022, unlike during the Great Recession, when the real estate market decreased for two consecutive years. While 2023 has seen U.S. commercial real estate sales activity decelerate notably, there is no indication that valuations will plummet like they did 15 years ago.