The CPN’s 2023 Recap: Riding the Real Estate Rollercoaster into 2024

As 2023 draws to a close, it’s an opportune moment to reflect on the trends and transformations within the commercial property market. The Commercial Property Network (The CPN) has sought insights from several of its Board Members to gain a national perspective on market performance in the past year and their vision for 2024.

The Dual Dynamics of the Market

2023 witnessed a divergence in performance across different sectors of the market. The occupier and investment markets, while interconnected, demonstrated varied trends.

From an occupation perspective, demand levels in 2023 generally mirrored those of 2022, suggesting stability. Interestingly, enquiries continued to grow in 2023, indicating cautious optimism, possibly as a result of anticipated challenges due to rising interest rates not materialising to a disruptive extent.

Investment Landscape: Adapting to Rising Interest Rates

Fergus Laird, President of The CPN and a leading investment expert, noted that 2023 was marked by minimal movement in investment portfolios, attributed mainly to the increase in interest rates. However, in late 2023 and continuing into 2024, there appears to be a noticeable shift in attitude among investors. With the market potentially bottoming out, savvy investors recognise the opportunities for bargains, a trend bolstered by a contingent of cash-rich clients within The CPN client base.

Looking ahead, it’s anticipated that by Q3 of 2024, market prices will begin to ascend. Investors seeking to capitalise on the lower end of the market should act swiftly in the early part of the year.

Refinancing and Borrowing: A Tightrope Walk

2023 did present challenges for those investors looking to refinance or borrow new money.  Lenders increased their margins significantly, with the base plus margin often hitting a staggering 10 to 12%, a sharp rise from the 5 to 6% seen two years prior. It is anticipated that the cost of money will start settle as the volume of investment transactions starts to increase.

The Occupier Market: Navigating a Stock Shortage

Carl Bradley, another industry expert, highlighted a crucial challenge in the occupier market: a stark lack of stock and new developments. This scarcity has impacted occupier dynamics, underscoring the need for strategic planning and innovative solutions.

Looking Forward: A Vision for 2024

As we step into 2024, the commercial property landscape is poised for a phase of cautious optimism. Strategic investment and astute market analysis will be key, with the potential for market recovery and price escalations anticipated in the latter half of the year.

The coming year presents a unique blend of challenges and opportunities for The CPN members and their clients. Leveraging the insights and expertise within the network will be crucial in navigating the evolving landscape of commercial property.

Stay tuned to The CPN for ongoing updates and expert perspectives as we journey through 2024, a year promising new dynamics and opportunities in the sector.

We would like to wish you all a very Merry Christmas and a happy New Year! A special thanks to all our Members, Network Partners and Clients for a ‘job well done’ in 2023 and we look forward to working with you in 2024!