Closing 2023 in a Major Market Slowdown

Times have gotten very tough. As the end of 2023 draws near, the commercial market is feeling the pain of months in decline.

The commercial market has experienced hardships this year. Ongoing challenges and slowdowns in sales volume and total transactions has led to an unfortunate state of affairs and the outlook for 2024 isn’t looking much better.

Declining Sales Activity 

Sales activity for 2023 has dropped significantly. In a rising rate market, leasing activity typically jumps, and sales activity drops, but that has not happened this year. Additionally, leasing activity never picked up like in years past when the rates rose resulting in an even harder hit. 
Wheeler Commercial has seen an overall income drop of 40% and sales and leasing numbers are down 47%. Declining numbers like these are affecting the entire industry. Recent commercial real estate reports show a 55% drop in sales volume in the United States and 57% globally.

Struggling Economy 

Another issue wreaking havoc on the real estate market is the overall economy. With inflation straining the entire country, small businesses are taking a huge hit yet again. Most business owners are fighting the battle of making significant spending cuts or spending the same but generating much less in total production/sales.
As companies pay more to produce the same amount of product, it’s causing them to increase prices for their customers. With less money for investors to spend on real estate, sales and leasing rates continue to drop.

Looming Election

The upcoming election is causing a wait-and-see attitude as many investors are watching to see how things play out. The results will be pivotal. Should the sitting party win, things could get worse. If results go the other way, business confidence could soar and bring positive economic change. Either way, the waiting game is putting quite a strain on investments.

Offsetting the Issues

Wheeler Commercial is no stranger to market volatility or a strained economy. To combat the recent hardships, our team has increased spending on advertising to the highest it has ever been, which has helped sustain business and allow us to continue to move property, though not as well as we would like. 

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Overall, things are tough out there, and facing another year of these hardships would put an enormous strain on all businesses.

As we await the upcoming election, expect 2024 to have some slight improvements. The market will likely start seeing rate cuts and some easing on businesses but do not expect a lot.

Wheeler Commercial will be continue to be a trusted resource for our industry and community. We will keep our clients and colleagues up-to-date on the market outlook.

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