The global landscape of commercial real estate is undergoing a transformation, witnessing a contraction in size. In the year 2022, the professionally managed global real estate market experienced a reduction of 4.1%, dwindling from $13.9 trillion in 2021 to $13.3 trillion. The findings, authored by MSCI in a recent report, attribute this decline to localized market downsizing brought about by macroeconomic challenges.
Interestingly, amidst this global downturn, the United States real estate market showcased resilience and growth. Holding its position at the forefront, the U.S. real estate market expanded, boasting a market size of approximately $5.4 trillion, securing a significant 40% share of the global market. In contrast, China occupied the second position, albeit at a considerable distance, with a market size of $990 billion.
The prominence of the U.S. market might raise eyebrows, especially given the backdrop of high interest rates, concerns of recession, and economic uncertainties. However, factors such as a robust dollar and a slowdown in other markets acted as pillars of support for the nation’s real estate sector. Despite facing challenges, the size of the U.S. real estate market has displayed a consistent upward trajectory since 2009. Unlike the Great Recession, where the market experienced consecutive years of decline, the U.S. real estate market remained resilient on the global stage throughout 2022, even in the face of lackluster performance in the office sector.
Although the year 2023 has witnessed a notable deceleration in commercial real estate sales activity in the U.S., there is currently no indication of a drastic plummet in valuations similar to the downturn experienced 15 years ago.