Following solid leasing activity in logistics, manufacturing, fulfillment and warehouse, Industrial CRE scored high in 2022. It was primarily fueled by the momentum gained from the chaotic growth in e-commerce sales in 2020 and 2021. Future fundamentals should continue to be strong, however, there is some speculation that a slowdown may be coming in the wake of an economic downturn. Fourth quarter net absorption was down 9.4% from the previous quarter, but not enough to significantly impact overall industry vacancy that remains tight at 3.3% as of year-end 2022. 

On the development front, pipelines are still flowing with 143.6 million square feet in new industrial space completed in the U.S. in Q4 2022 alone — for a grand total of 495 million square feet for the year. There’s another 682 million square feet in new developments underway for 2023. However, as economic uncertainly looms and consumer confidence wavers, experts warn supply may soon outpace demand in some markets.

Labor shortages and skills gaps will also continue to plague most industries, and DateX Corp anticipates it will cost the United States as much as $1 trillion in 2030 in the manufacturing space alone. In response, look for more industrial operators to implement innovative technologies and automation at the property level — especially in manufacturing — such as robotics, artificial intelligence (AI), and machine learning, to alleviate pressure and replace select human duties and labor functions.

Bottomline: Despite some potential cooling this year, industrial is one of the most active sectors and through its adaptive nature should maintain its position as a leading CRE asset type in 2023.


Overall, the multifamily sector performed relatively well in 2022, buoyed by job expansion, solid wage gains, and a shortage of for-sale single family homes and rising mortgage rates. However, just like the industrial sector, year-end results showed some softening in rent growth and absorption as economic uncertainty stifled new household formations. U.S. household formation was 1.2 million in September 2022 compared to 1.65 million at the start of the year. predicts that the multifamily sector will continue to retreat with rents decreasing across the board and national vacancy exceeding 7% by year-end. Greater implementation of property technology, known as “PropTech,” is especially something to watch for. Dedicated mobile apps can elevate the community experience through electronic payments, amenity reservations, maintenance requests, mobile visitor entry access, and package delivery management — just to name a few. These can prove to be a differentiating factor in the overall perceived valuation of an asset by tenants and potential investors.

Bottomline: People will always need a place to live, and multifamily has historically shown to be more recession-resilient compared to other CRE asset classes. Freddie Mac anticipates “growth in multifamily fundamentals to decelerate through the first few months of 2023 — but demand for housing, including multifamily, is expected to return later in the year.”


While the pandemic had a significant impact on all real estate, there’s always been staying power in office. Today, it appears the sector is in a bit of a holding pattern because of interest rates and economic conditions hampering the business environment. However, occupancy hit a new pandemic record high last week, as workers continue to return to the office after the holidays. The 10-city Back to Work Barometer reached 50.4% occupancy, exceeding last year’s high of 49.0%. The highest day of the week for the 10-city average was Tuesday at 58.6% occupancy. Heading into the coming months, investors may practice caution and are more likely to hang on to their assets rather than sell or buy. Instead, we should see them reinvest their energies into improving and maximizing existing space into “future office” space.

Future office space will become more purposeful and more intentional, meaning there will be a greater focus on how people work and how they engage with their work environment. For the most part, office layouts will continue to follow the open configuration trend and flexible design concepts that can accommodate a fluid workforce.

Emphasis on health and wellness in the workplace has become standard practice. Companies are increasingly seeing that a “healthy” work environment can attract and retain talent, as well as support stronger business performance due to lower employee sick leave. Office CRE operators are particularly well-positioned to help tenants achieve a healthful workplace through asset details like touchless technologies that limit the spreading and exposure to germs; enhanced HVAC systems for improved air quality control; and more outdoor space.

Bottomline: There are certainly challenges ahead in the office sector — as with all of CRE — but there’s also tremendous opportunity for investors to take this time and rethink how their offices are positioned for the modern workforce and future labor market. 


After a massive surge in retail spending (both in-person and online) in 2021 and early 2022, sales started to decrease last year.  Consumers like the physical shopping experience, but they also desire the flexibility of digital commerce. 75% of consumers engage in omnichannel to research and purchase goods, putting retailers in the hotseat to amplify their shopping experience both online and in-store. Brick-and-mortar operations have to be strategic in their location and format as bigger isn’t always better. Given ongoing supply chain constraints, labor issues, and the rising cost of doing business, small format stores are by comparison easier and less expensive to staff and operate. It also provides a completely different and perhaps a more personal shopping experience than bigger shops.

Also look for increased investments in online retail platforms with a push for greater mobile integration for an all-encompassing shopping experience. According to Statistica, retail mobile commerce sales will grow to approximately $710 billion by 2025.

Bottomline: Retail is no stranger to change. COVID-19 was a huge learning opportunity for retailers to be more pliable to unforeseen change. The headwinds of 2023 may be strong, but making the shopping experience a core strategy could help retailers prevail during this cycle.

Sustainability and PropTech Across All Sectors

While each CRE sector is unique to its own conditions, there are some trends that will impact all CRE in 2023, one of which is the flight to Environmental, Social, and Governance (ESG). It is widely known that CRE is the largest contributor of greenhouse emissions. Developers, operators, and investors have already started taking proactive steps to shrink their carbon footprints through voluntary actions like utilizing eco-friendly materials, implementing conscious recycle and waste management protocols, using energy-efficient appliances and machinery, and employing sustainable utility practices. Companies like KBS, that are prioritizing the physical, mental and emotional wellness of their employees and using the tenets of ESG as a foundation, are far more likely to attract younger talent and retain their existing workforce — as people feel valued and respect the values of their employers.

Looking ahead, we also anticipate federal, state, and local governments and entities to take the stage and offer new incentives and programs to accelerate the broader adoption of ESG. Washington, D.C., already has an aggressive climate change agenda and previously outlined initiatives aimed specifically at CRE, including the National Initiative to Advance Building Codes plan that was announced in June 2022.

More lenders may also be willing to offer “green financing” to bring projects to fruition in 2023. Fannie Mae is one such lender that currently offers a green financing program for multifamily projects.

PropTech adoption is another area expected to gain significant footing throughout the CRE industry, not only to improve the tenant and property experience, but to maximize a building’s overall performance. PropTech solutions are designed to address various pain points quickly and efficiently with greater accuracy and less human intervention — lowering the margin of error and associated risk. This may include construction management, marketing and sales, lease management, building operations, tenant engagement and communications, and financing and accounting. 


There is no report to tell us exactly what 2023 will bring and how these potential trends will shape up. In fact, the current environment is changing from one headline to the next, and what is true for today, may very well be obsolete tomorrow. But what we do know is every CRE sector is subject to change, which means the possibility for new opportunities.

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