Ashland Capital: Key Insights for the Commercial Real Estate Landscape in 2024

As we navigate the second half of 2024, the commercial real estate (CRE) market presents a mixed but largely positive outlook, offering a myriad opportunities and challenges. At Ashland Capital, we believe in keeping our community informed about the trends that impact our investments and operations.

Here’s a detailed look at the key points shaping the CRE landscape this year:

1. Positive Performance in Multifamily, Industrial, and Retail Sectors

The multifamily, industrial, and retail sectors are showing strong performance. These areas are expected to continue thriving, providing promising opportunities for investors. Retail, in particular, is benefiting from the popularity of grocery-anchored neighborhood shopping centers and a trend towards smaller concept stores.

2. Persistent High Interest Rates and Rising Office Vacancies

Higher interest rates are expected to persist throughout the year, which is a critical factor for all investors to consider. Office vacancies are also on the rise, with the national office vacancy rate reaching 19.6% in Q4 2023, breaking previous records. This trend highlights the ongoing shift in work habits and the need for adaptive strategies in office space utilization.

3. Increased Transaction Activity and Loan Originations

The forecasted increase in transaction activity, loan originations, and CMBS issuance by 25% to 30% compared to 2023 lows indicates a rebound in the market. This resurgence presents a ripe opportunity for strategic investments and growth, but we remain prudent in our underwriting to deliver compelling risk-adjusted returns.

4. Managing Liquidity for Future Opportunities

Investors are advised to manage their liquidity to seize future opportunities. Utilizing Treasury services and rent payment solutions can optimize cash flow, ensuring preparedness for advantageous investments as they arise. The Ashland Private Credit Fund offers investors liquidity with equity-like returns, offering compelling risk-adjusted returns.

5. Lack of Affordable Housing Supply

There is a concerted effort to increase the supply of affordable and workforce housing through innovative financing approaches. This focus not only addresses housing affordability but also supports economic stability and growth in various communities. While the need exists, supply remains limited.

6. Global Conflicts and Political Uncertainty

Ongoing global conflicts and the upcoming U.S. presidential election are factors that could impact market volatility and consumer confidence. Staying informed and agile in response to these events will be crucial for navigating the market landscape.

At Ashland, we believe investors should maintain a balanced investment portfolio including equity and debt investments. The Ashland Private Credit Fund offers a compelling credit investment opportunity with equity-like returns and liquidity. We continue to pursue equity investment opportunities across the multifamily and student housing property sectors.