An Artificially Good Year Ahead
Navigating the Real Estate Landscape in 2024: A Tapestry of Resilience, Rate Hikes and Lumbering Expectations …
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Fed Up:
Amid supply chain disruptions, record inflation, and multiple interest rate hikes (11 between March 2022 and July 2023), the commercial real estate sector faced a perfect storm, hindering the post-pandemic construction boom. However, as 2023 concludes, there is optimism. Material costs are gradually normalizing, although still above pre-pandemic levels. Year-to-date data (Jan-Nov. 2023) indicates a 3.1% retracement in the Produce Price Index (PPI) for construction materials compared to the same period last year, signaling a positive trend.
Resilience:
Expectations about a rate cut happening sometime in the second half of 2023 did not materialize. However, following the Fed’s FOMC most recent meeting in December, they’re predicting 3 rate cuts in 2024.
Around this time last year, it was widely perceived that the U.S. economy was going to slip into a recession in 2023. Contrary to these expectations, the U.S. economy displayed resilience, in the wake of elevated interest rates and mounting geopolitical tensions.
Greenbacks backing green projects:
Funding from public-private partnerships are incentivizing passive design principles and finance LEED-certified assets. A theme that will continue to shape the construction industry is sustainability and access to capital that promotes ESG objectives.
I’ll be back:
The recent surge in applications of generative artificial intelligence presents a unique opportunity to realize and capitalize on efficiencies in project design, schedules, controls, and safety. For smaller firms contending with diminishing backlogs, adopting AI to support lean team structures isn’t just a matter of staying competitive; it’s necessary for survival.
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Disclaimer:
The content provided in this report is for informational purposes only. The content of this report is not intended for investment advice, nor is it provided on a fiduciary basis. The opinions and views expressed in this report may be subject to revision and do not purport to reflect the views of Tocci Construct, LLC (“TOCCI”) or its members. TOCCI makes no assurances regarding the completeness or accuracy of the information herein, is not obliged to provide updates and shall not be held liable for use of the information or opinions expressed herein.