At the dawn of 2024, a U.S presidential election looms amidst numerous geopolitical challenges including two major ongoing wars in Europe and the Middle East which threaten global economic growth. The good news is, thus far it appears the U.S. economy has avoided recession with many now perceiving continued growth, albeit subdued. Inflation has cooled, the economy continues to add jobs, interest rates appear to have peaked and are anticipated to gradually decline for the next two years. Furthermore, a roaring stock market continues to fuel American consumer expenditures resulting in strong demand for travel including lodging.

Despite a resilient economy, 2023 was an about-face in the capital markets. Due to the swift and dramatic rise of interest rates, transactional market volumes have dramatically decreased. Bid/Ask spreads remain largely unsurmountable unless sellers are forced into a disposition or buyers are willing to trade at low capitalization rates despite higher borrowing costs.

Increased interest rates and inflation coupled with the persistence of remote and hybrid work arrangements have battered the U.S. commercial real estate sector, particularly the office market. Elevated vacancy rates and rising levels of loan delinquencies are challenging the ability of office building owners to refinance debt maturities, which has led to reduced asset pricing and distressed sales that impact the value of surrounding properties. Furthermore, a decline of foot traffic has had a compounding effect of reducing demand for restaurants and retail locations in numerous downtown urban cores.