June 30, 2023

Trends and opportunities the 2024 market

by Rafi Golberstein

While attending CREF-C in Miami, the PACE Loan Group team noted a general sense of optimism about interest rates and increased transaction volume in 2024. While PLG expects rates to remain high relative to the historical lows observed over the past several years, the continued strain on the overall refinancing market will provide significant opportunities for preferred equity players and alternative forms of financing, including C-PACE.

Trends and opportunities are shifting up in 2024.

Due to this sustained market uncertainty, lenders, especially debt funds, are beginning to accept alternative sources of capital like C-PACE as necessary additions to the capital stack. With the potential for market volatility and unwavering rates, developers and owners will need to get creative with their projects’ financing to get maturity relief and have their deals pencil in 2024.

2024 Market Outlooks

Blackrock
“Some public real asset prices have adjusted more than some private counterparts. Capturing the opportunities requires selectivity, understanding what’s in the price and having the agility to shift between real assets at a granular level…”
https://www.blackrock.com/corporate/literature/whitepaper/bii-global-outlook-2024.pdf

Goldman Sachs
“Inflation nearing target, no imminent US recession, but markets already priced for soft-ish landing.”
https://www.goldmansachs.com/intelligence/pages/gs-research/global-markets-outlook-2024-towards-a-better-balance/report.pdf

JLL
“The rising costs of debt and volatility in indices are influencing lender sentiment and market dynamics globally. While all major sectors experienced notable declines during the third quarter, sectoral outlooks in the short and long term are varied, as sentiment and performance across property sectors remain bifurcated.”
www.jll.ca/content/dam/jll-com/documents/pdf/research/global/jll-global-real-estate-perspective-november-2023-summary.pdf

Deliotte
“Many real estate firms aren’t ready to meet environmental, social, and governance (ESG) regulations. Nearly 60% surveyed say their firms lack the data, processes, and internal controls necessary to meet compliance standards.”
https://www.deloitte.com/us/en/insights/industry/financial-services/commercial-real-estate-outlook.html

PWC
“We think it will take until 2024 for an uptick in transaction volume, but it will come. It won’t necessarily hinge on a lowering of interest rates by the Fed. It could happen before then as people get used to the new higher rates and start to transact again.”
https://www.pwc.com/us/en/industries/financial-services/asset-wealth-management/real-estate/emerging-trends-in-real-estate.html

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