Commercial real estate investment value in the U.S. 2019-2023, by property type
Amid a worsening economic climate, the value of commercial real estate investment in the United States decreased in 2023. The multifamily sector, which grew substantially since the beginning of the pandemic, comprised the largest share of commercial investment. Across different asset classes, the value of commercial real estate investment fell by up to 60 percent.
Development of cap rates
Cap rates started to increase in 2022, reflecting a decline in property values. According to the forecast, cap rates for commercial real estate are expected to peak in 2024, followed by a steady decline. Cap rates measure the expected rate of return on investment properties and are calculated by dividing the net operating income of the property by the current asset value. While a higher cap rate indicates a higher rate of return, it is also associated with higher risk.
Property with the best development prospects
In 2024, the development opportunities in the commercial real estate sector deemed the best for multifamily real estate. Industrial and distribution real estate, including warehouses, factories, and big box distribution centers, was also ranked high.
