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Political Unrest, Office Usage, Housing Shortage Top List Of CRE's Biggest Issues For 2024

Real estate executives are worried about the health of the global economy, the office market, the housing shortage and several other concerns, according to The Counselors of Real Estate's Top Ten Issues Affecting Real Estate For 2024 report, released Thursday. 

The New York City skyline

The report is based on the leading concerns of the 1,000-member group that makes up CRE. 

“This past year has been challenging for some and opportunistic for others as the economy, office market and innovation continue to evolve and impact the market,” William McCarthy, global chair of The Counselors of Real Estate, said in a statement. “Additionally, the housing shortage and infrastructure issues continue to cause disruption.”

The top concerns are political unrest and global economic health, which have proven to have direct impacts on the industry. With the volatility of the economy, the weakening banking sector due to the closure of two major banks and other prevalent risks to the industry, CRE members said it is important to keep these risks in mind as they move through economic uncertainty.

The next leading concern real estate leaders had was the fate of the office market and impending devaluations of products, especially in cities' central business districts. Although there has been a bump in the number of workers that have come back to the office, there is still uncertainty around how much time is spent in the office and pressure on landlords to create locations where employees want to work.

The global housing shortage was third on the list due to the 4.3 million new units of housing needed in the U.S. alone to meet its 2035 housing demand, according to the National Apartment Association and the National Multifamily Housing Council. Though the number, when broken down by year, would be achievable in a regular market, due to higher construction costs and tighter lending, the market is predicted to slow in the coming years.

In the age of ChatGPT and other artificial intelligence software, AI is becoming a prominent player in the real estate industry, as it can mine massive amounts of data and accurately predict key figures. However, as AI technology continues to rapidly improve and change, the industry needs to begin to embrace the technology.

The labor shortage also made the list, as companies across industries are struggling to find skilled workers. Real estate professionals are also concerned about migration trends that have impacted the real estate environment. When remote work was most prevalent at the beginning of the pandemic, workers moved out of cities and into more affordable areas of the country.

Constant concerns have included the economy, interest rates and inflation, which grabbed the industry's attention for more than a year. Rates are at the highest level in decades, and higher costs have had rippling effects across the industry.

The report said another concern was the fate of the supply chain and logistics industry, which has massively changed since the height of the pandemic. Most of the major imports and exports are coming out of the East Coast and Gulf Coast ports, with New York and Charleston becoming major port players in the space, according to the report.

The last two concerns involved a looming pricing reset for commercial real estate valuations and needed investments in the country's aging infrastructure.