2023 Commercial Real Estate Outlook

The Commercial Real Estate Market in San Diego is drastically different than it was in 2021. Interest rates for Owner-User building purchases have increased by an additional 4%, making it more challenging for prospective Buyers to afford a new building purchase.

Most Investors are now looking for a minimum cap rate of 6% – 7%. This has been a bright spot for 1031 Investors. The exchange Buyer now has a competitive advantage over many Buyers who underwrite building acquisitions with financing.

Expect a steady upward pressure on lease rates since many prospective Buyers will be taken out of the market, due to onerous financing. Vacancy rates remain very low and Landlords will continue to push rents as aggressively as possible. 

Be prepared to react to more building inventory in 2023. Property owners who bought buildings with variable-rate financing may be forced into a must-sell scenario. This will loosen up the market, but we may not see that happen until Summer of 2023.

Here is a great article from GlobeSt.com

For more information about your Real Estate market, please access our quarterly snapshot below, specific to your location. You will find sale comps and notable properties listed for sale and lease.

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We hope your 2022 is proving to be prosperous.