Rigorous risk management needs to be the watchword for lenders in the world of commercial real estate amid the uncertainties afflicting most segments of the market, according to CoStar. "The rapidly changing market conditions underscore the importance of monitoring market trends and LTV [loan to value] with live data as an essential factor in managing credit risk effectively," advised CoStar's November 2023 update.

In the retail sector, smaller seems to be better. The average size of a new retail lease in the first 10 months of 2023 was 3,265 SF – the lowest level since 2007, and below the 10-year average of 3,500 SF. Yet even though leases for spaces of less than 2,000 SF held relatively stable compared to 2022 with more spaces available, that is not expected to continue.

CoStar predicts demand for such spaces will fall 2% year over year with an even larger drop of 7% for spaces over 2,000 SF in the same period. Meanwhile, a lack of available supply has hurt leasing of large and mid-sized spaces over 10,000 SF along with a drop-off in new construction starts.