However, he does not predict a deep recession for this year: “The economic recession will not be deep. The company’s financial situation is good and employers will avoid layoffs in order to avoid losing workers in a tight market for skilled workers. While consumer confidence has weakened significantly, average household debt is lower than it was at the beginning of past recessions. These indicate a low rate of decline, with unemployment unlikely to reach the 6% level. The inflation rate will be very low in the second half of 2023, setting the stage for the drop in interest rates and the beginning of a new cycle that will last until the 2030s.
The pace of change will not be easy
“Despite the economic challenges, the pace of change will not be easy,” Barkham said. “ESG (environmental, social, and corporate governance) considerations and the growth of the digital economy will continue to affect real estate needs,” he said. “Agriculture provides many benefits for businesses and workers, but companies and the office sector must be improved. Cities also need to adapt to new modes of transportation and reduce the need for offices. A resurgent retail sector has recently reaped the benefits of a long period of change, which has attracted investor interest. Data centers and commercial buildings will be the most resilient sectors and the housing shortage will benefit many families. The hotel sector will continue to recover from disease restrictions, but the life sciences activity, which was triggered by the COVID, will be relaxed for a while as the business income decreases. All areas in all areas will require governments, residents and investors to make significant efforts.
Hope remains despite the setback
“Higher interest rates will weigh on the US economy in 2023,” Barkham said. “House prices and sales will fall, and unemployment will increase. The continued strength of the US dollar against other world currencies will further increase corporate income and exports, limiting capital investment. As a result, CBRE expects a decline in 2023, resulting in less investment and rent. Adding to the deflationary effects of monetary policy is a sluggish global economy. High energy prices, the war in Ukraine and weak housing demand will restrain growth in 2023.
“Although we expect a loss, we are not too pessimistic. The American consumer has low leverage and relatively strong balance sheets. The digital economy and the recovery of manufacturing—especially semiconductor manufacturing—are two important drivers.
See a slowdown in consumer demand
“Decreasing the price in 2023 will create a tail for the economy at the end of the year,” said Barkham. “Although the decline will be gradual and moderate, CBRE foresees that the slowdown in consumer demand, the easing of the global retail epidemic and the weakness of the housing market will reduce the rate down to 3% by the end of the year. We expect the Federal Reserve to reduce its rate hikes after raising interest rates to 5.2%. The economy should stabilize at the beginning of the 2024 but the impact of the recession on real estate will remain until jobs grow again. For the first time in ten years, there is a possibility of a buyer’s market in real estate. The Depreciation in 2023 will create a tail for the economy at the end of the year. Although the decline will be gradual and empty , CBRE predicts that the slowdown in consumer demand, the decline in global retail prices and the weakness of the housing market will push prices down to 3 % at the end of the year. We expect the Federal Reserve to reduce its rate hikes after raising interest rates to 5.2%. The economy should stabilize in early 2024 but the impact of the recession on real estate will remain until employment picks up again. For the first time in ten years, there is an opportunity to be a real estate marketer.”