U.S. Real Estate Sector Fall 2023 Report: Four Quadrant Perspectives

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Sector conditions and outlook


⬆️ ↗️ ➡️ ↘️ ⬇️
Improving Neutral Deteriorating Positive Moderately positive Neutral Moderately negative Negative

Current condition



The apartment sector is starting to

Current condition



The single-family rental sector is one of a few that are experiencing an improvement in fundamentals as demand remains healthy and rent growth is in the mid-single digits. Pressures from the supply side of the market remain a concern, but the lack of financing available for new development will curb new supply over the next 12 months.



The data center sector remains tight, with demand continuing to increase through the first half of 2023. Occupancy remains in the high 90% range and rental growth trends remain healthy as space is in short supply, which continues to be a potential headwind for the sector. Although capital markets remain a persistent headwind, this is one of the few sectors that is contnuing to see an increase in demand for space despite economic uncertainty.



Tenant demand is robust and leasing for the 2023-2024 school year outperformed expectations for both occupancy and rental rates. Tenant demand and rent increases may now be positioned to outperform traditional apartments over the near-term horizon.



Life sciences has seen both capital market and space market fundamentals pull back in 2023. Venture capital funding, a key source of growth for life science companies, has become much scarcer during the year. As a result, tenant demand has moderated considerably for lab space.


Source: Principal Real Estate, September 2023

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