WASHINGTON – RealEstateRama – Positive but slow growth is in store for the U.S. economy over the next two years with a return to stronger growth and average inflation in 2025. Changes over this three-year forecast period are expected to reflect this pattern, according to the latest edition of the Urban Land Institute’s (ULI) semiannual Real Estate Economic Forecast.
“Survey respondents forecast slower to negative results in real estate overall in the near term and a return to stronger growth in 2025, although the extent and timing of that differs among property types by 2025,” said Anita Kramer, senior vice president, ULI’s Center for Real Estate Economics and Capital Markets.
The Spring 2023 ULI Real Estate Economic Forecast is based on the median forecast from 41 economists and analysts at 37 major real estate investment, advisory, and research firms and organizations. It addresses 27 key economic and real estate indicators, ranging from GDP and employment figures to commercial real estate transactions and property sector performance. This spring’s survey was conducted between April 10 and April 24.
Insights from the latest edition of ULI’s semiannual Real Estate Economic Forecast include:
- Commercial real estate transaction volume is forecast to drop in 2023 to $425 billion, down from $730 billion in 2022. However, transaction volume is expected to rebound in 2024 to $525 billion and reach $695 billion by 2025.
- Prices across all property types are expected to decline 8% in 2023 – the largest all-types drop since 2010. Prices are projected to grow 2.6% in 2024 and 5.0% in 2025.
- Changes in vacancy and availability rates vary by property type. Availability rates for neighborhood and community shopping centers are expected to remain unchanged. Industrial availability rates are expected to inch up slightly but remain tight by historic standards. Office vacancy, already at elevated rates, is expected to increase another 135 basis points in 2023.
- The inflation rate is forecast to decline significantly over the forecast period. The Economic Forecast projects a 12-month CPI increase of 4.1% for 2023 and a 2.8% increase in 2024, and ending the forecast period at the long-term average of 2.5%.
- Real GDP growth is expected to slow to 0.9% in 2023, down from 2.1% in 2022. The Forecast projects that GDP will increase 1.5% in 2024 and 2.5% in 2025, at which point it will have exceeded the average GDP growth of the eight pre-pandemic years.
The full results and analysis can be found on ULI’s Knowledge Finder.
About the Urban Land Institute
The Urban Land Institute is a non-profit education and research institute supported by its members. Its mission is to shape the future of the built environment for transformative impact in communities worldwide. Established in 1936, the institute has more than 46,000 members worldwide representing all aspects of land use and development disciplines. For more information on ULI, please visit uli.org, or follow us on Twitter, Facebook, LinkedIn, and Instagram.