Cascading message: “Canaries in the coalmine.” 2024 will be the year of clarity caused by the upcoming election, interest rates and a lurking recession.
- 2024 is the year of clarity: due to past recessions, the next 12 months will be the predictor of the next recession. Currently, there is no evidence that the Fed will be raising the borrowing interest rate by 100 basis points (bps), but more likely 50 bps.
- Sectors in danger are multifamily – due to cap rates/high interest rates, oversupply, and declining rents – and office space.
- Thriving sectors are in retail and industrial.
- Greatest population migration happened in Florida, Texas, North and South Carolina. Florida counties Polk, Lake and Pasco had seen the greatest migration in the country.
- Florida’s Orlando and Tampa had the greatest wealth migration in the country.
- Interest rates remain historically low, however current inverted interest rates are a sign of a looming recession. Currently, a 30-year fixed is 7.08% and a 15-year fixed is 6.42%.1
- The larger/riskier the loan, the higher the spread the bank needs to obtain. We are currently working a $450,000,000 loan has an 11% interest rate.
- $2.2 trillion of commercial debt is coming due between now and 2027.2
- $450 million of multifamily debt in Orlando, FL is maturing in Q1 of 2025.
- Construction material costs have come down across the board, but subcontractor labor prices remain strong.
- Property insurance rates have increased across the board. Experts predict a 5% to 25% increase in commercial property insurance premiums in 2024.3
- Mortgage News Daily (Feb. 13, 2024) ↩︎
- The Bill Is Coming Due on a Record Amount of Commercial Real Estate Debt by Peter Grant. WSJ (Jan. 16, 2024) ↩︎
- Navigating the 2024 Commercial Property Insurance Market by CBIZ (Jan. 8, 2024) ↩︎