January 30, 2024 MWCRE Market Pulse

• There were 130 brokers, managers, owners and developers that responded to a recent Western Real Estate Business survey on forecasts for 2024. Of those surveyed, 35% believed their firm’s transaction dollar volume would be higher in 2024 than it was in 2023, 39% predicted it would be lower with the balance (~26%) forecasting a similar volume in 2024 to 2023.
• The developers, owners and managers group also answered questions on whether they would be net buyers (42%) or planning to break ground on a project in 2024 (58%).
• Of the respondents indicating they planned to break ground on a project in 2024, retail was the top asset type for development at 37%, followed closely by multifamily (33%) and industrial (27%) with mixed-use (13%), office (7%) and hotels (6%) further back.
• One of the respondents, Vedanth Shetty from Grandway Group in Los Angeles, summarized respondents’ development sentiments saying, “The greatest opportunity for the commercial real estate industry in 2024 lies in industrial, multifamily and necessity-based retail. Industrial continues to benefit from low vacancy rates and the growth of online retail, while multifamily is buoyed by strong population growth and a lack of supply, making it resistant to recessionary pressures. Necessity-based retail, particularly grocery-anchored developments, is seeing a resurgence due to limited new retail supply and strong community demand.”
• Respondents also weighed in on the office market, and 28% were uncertain if office building utilization would ever return to pre-pandemic levels, followed by 26% responding that pre-pandemic office space utilization would never return and 18% saying three years. The balance of responses was somewhere between 6 months to 2.5 years.

By Rich Lachowsky

• The usage of buy now, pay later programs has surged over the last few years amid consistent inflation and rising interest rates.
• Buy now, pay later consumers continue to rely on credit cards for a range of expenses, from fuel and groceries to travel and luxury, and are extending the time it takes to settle these debts.
• In the third quarter of 2023, nominal balances on credit cards from major banks continued to rise. Delinquency rates now exceed pre-pandemic levels for the first time, nearing highs not seen since 2012. Responding to this trend, banks have scaled back on granting credit line increases and have been more frequent in reducing credit lines over the past year.
• Total household debt rose by 1.3% to reach $17.3 trillion in the third quarter of 2023, according to the latest Quarterly Report on Household Debt and Credit. Mortgage balances increased to $12.1 trillion, credit card balances to $1.1 trillion, and student loan balances to $1.6 trillion.
• Researchers at the Philly Fed discovered an increase in credit card delinquencies, with 3.2% of balances being 30 days late (up from 2.8% in the previous quarter), 2.2% delinquent by 60+ days (up from 1.9%), and 1.5% in serious delinquency of 90 days or more (up from 1.3%).
• A larger proportion of individuals are carrying over some or all of their credit card balances. Philadelphia Fed data indicates that, as of the third quarter, only 33.2% of accounts cleared their balance completely, marking the lowest percentage since the fourth quarter of 2020.

By James Ice