Economically in the U.S., the fourth quarter was somewhat uneventful but generally positive. M&A activity saw a bit of a spike, while inflation news was favorable, which encouraged the Fed to stand pat on rates. Employment remained strong and consumer spending was resilient.
Commercial real estate news was generally less positive. Transaction activity remained extremely depressed, while most sectors saw some fundamental deterioration and valuations decreased broadly. Industrial and multifamily vacancies were rising while margins were being compressed on both the revenue and expense sides.
The news was a little better for owners of retail assets, which continued to benefit from strong demand for space. Capital markets continue to be the primary culprit behind stagnant markets with elevated borrowing costs discouraging development and acquisition activity. Unless motivated by events or distress, sellers have little incentive to sell, and buyers perceive assets as overpriced in the current environment.
For further analysis of the fourth quarter, download our latest report.