The U.S. commercial real estate market is in a state of transition, with several disrupting factors at play, according to Kevin Fagan, with Moody’s Investors Service.
The banking failures this spring and the still climbing interest rates are continuing risks for the market, said Fagan, who served as the keynote speaker at the annual TRENDS seminar Thursday morning sponsored by the Greater Baton Rouge Association of Realtors.
Another negative factor: escalating insurance rates.
“We’re definitely in a time period right now where there’s big imbalances in the economy,” he says. “The imbalances that exist can’t continue to exist.”
Overall, Fagan is expecting the national GDP to increase from 1.23% this year to 2.46% next year. But despite the quelling of recession fears and a positive outlook for the GDP, there’s still looming issues putting pressure on the economy, and in turn impacting commercial real estate.
Fagan says to watch oil prices and tough “supercore” inflation rates moving forward, and warns that there are still a lot of questions related to the nation’s banking system that haven’t been resolved following March’s “banking crisis.”
