CORFAC News

The sectors fueling business activity for many CORFAC members shifted slightly in the latter half of the year, according to CORFAC International’s Year-End 2023 Market Survey. The warehouse/distribution sector fueled the transaction pipeline for over 67% of respondents, bumping industrial/manufacturing into second place. Retail, office and investment sales rounded out the top five sectors contributing to the deal stack.

Members' clients continue to feel the pinch of inflation and economic uncertainty with 67% reporting lower transaction volume than earlier in the year. However, local market business sentiment remains positive to very positive for over half of survey respondents, and several markets are benefitting from business and population migration. “An influx of population is creating CRE demand in our market,” said a respondent. 

Yet high costs for construction materials and workers’ reluctance to return to offices continue to hamper activity overall. “The return-to-work pace has been much slower than expected,” said a respondent. 

Recession worries eased somewhat among respondents with 50% expressing concern, down from the 70% of respondents that expressed concern earlier this year. When making real estate decisions, members say their clients also interest rates and lack of available financing as roadblocks. “Inflation and rising interest rates have significantly impacted our small business owner clients’ ability to tap into lower interest financing,” one respondent said. 

Changes Ahead in the New Year
Survey respondents said the office sector is poised for the most change in 2024. Return to work mandates will continue to have an effect, but as leases come due many office clients are looking to offload excess space. “We also expect creative repurposing of aging office product in our market,” a respondent noted. 

The investment sector is likely to be active in the new year as well. “There is a potential levelling out of significant capital value declines over the last 18 months, providing good value for money,” said a respondent. Stabilizing interest rates should also ease the worries of some buyers, fueling more investment activity in the coming months. 

Sources of new business remained steady from early in the year, including clients downsizing, clients expanding, new companies locating to the market and business won from competitors. In addition, 26% of respondents received a referral from another CORFAC member since mid-year, a positive indicator of the network’s value for business development in challenging conditions.

With lower transaction volume and continued market uncertainty, clients need experienced local market experts now more than ever, and CORFAC brokers are poised to provide this valuable insight.