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  • Gregg Davis

2023 Q4 Review and 2024 Outlook

TREASURE VALLEY COMMERCIAL REAL ESTATE STATISTICS:

4th Quarter 2023 (or most recent statistical information available is portrayed below)




 

*compiled from multiple sources including NARPM, Colliers Market Research, Marcus & Millichap Market Research, RealPage, and CoStar


All of these numbers represent a fairly balanced market of supply and demand in each sector although geographical pockets of higher or lower vacancy may exist, the overall market in the Treasure Valley.  If we looked back at the historical averages, we would see that these numbers are pretty close to the trend lines for each sector. 


Here are some 2024 outlook highlights:


  • Commercial Interest Rates – 7 % on most credit union or regional bank loans.  Some programs in the 6.5% range right now.  SBA rates are 6.51% currently. National multifamily brokers can access funds under 6% for some deals currently.

  • We are feeling better about the odds of us actually achieving a “soft-landing”; however, the current mantra has become “higher for longer” with regard to interest rates in the future.

  • It is looking like inflation should stabilize in 2024 giving the FED a chance to continue their pause and watch how inflation and the markets proceed.  Rates may begin to drop slightly in Q3 of 2024, but I don’t expect to see rapid drops. 

  • Owners have been realizing huge losses (average apartment value has dropped 13-21% depending n the property type and location since the peak).

  • Properties purchased in 2019-2020 will have mortgages that will reset in the 2024-2025 which may result in their mortgage payments doubling.  Some may go back to banks as REO.  Others may seek infusions of capital to get back in alignment with DSCR’s.


In summary, we believe that 2024 will be a stabilizing year in our cycle that will create the new floor from which growth and advancement in the market will occur in 2025 and beyond.  For those that have been waiting for a crash to jump in and take prisoners (figuratively), we don’t think your are going to get that opportunity.  We think rather than sharpening your knives, you might be better served sharpening your pencils to see how you can make deals work in 2024 because this will be the year that people look back in 5 years and say, “I wish I had bought more property in 2024 when things were on discount”. 


If you would like to discuss this further, please don’t hesitate to reach out!


Gregg Davis

High Ground Commercial Real Estate - KW Commercial

208-344-6275

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