Real wage growth for the consumer is projected to remain positive in 2024, primarily due to the decline in inflation. We are confident that the inflation spike in the US and other major global economies is behind us. The disruptions in the supply chain caused by the Covid era have mostly been resolved.

Forecasts indicate that corporate earnings will remain robust in 2024, playing a crucial role in preventing widespread corporate layoffs. The bond market has rebounded from concerns in October, with 10-year treasuries dropping from 5% to around 4%. In the real estate sector, a target of 3.5% to 3.6% for treasuries could trigger a notable increase in real estate investment activity.

Interest rates are expected to decrease gradually. The recovery of the NASDAQ and the tech sector is highly promising, suggesting potential upside in tech employment growth for 2024. The tech sector, which has been a driving force in leasing from 2010 to 2020, is likely to see increased growth in the coming year.

Anticipating a gentle descent with no recession, economic activity is poised to rebound in the latter half of 2024, with sustained growth expected in 2025 and 2026. Overall, commercial real estate (CRE) fundamentals appear robust, excluding the office sector. Projections suggest that cap rates will reach their peak around mid-2024, excluding the office segment, and subsequently experience a gradual decline, contingent on the trajectory of the 10-year treasury in the upcoming quarters.

A major challenge facing the retail market is a lack of space. With low vacancy rates, we expect an uptick in rental rates going forward, especially in suburban areas. Looking forward, we expect strip center availability to be even tighter in the Portland market.

In Portland, the retail and white-collar job sectors are anticipated to witness the most growth over the next decade. Investment volume is projected to surge in 2024, presenting investors with an opportunity to secure favorable rates of return. While the pace of growth may be slower, a recession is not foreseen, although risks persist at elevated levels.

Interest rates are gradually decreasing, contributing to a stabilization of real estate values. Capital markets activity is anticipated to gain momentum in the latter part of 2024, and while net absorption remains below the trend, it remains positive.