JLL – Global Real Estate Perspective, Nov 2023

As we approach the end of 2023, the global economy is still facing numerous challenges. Inflation rates are high but decreasing, major central banks are tightening their monetary policies, and labor markets are showing signs of slowing. This uncertainty is causing companies to take longer to make decisions and review their portfolios, leading to a decrease in occupier demand. Additionally, the high cost of capital and conservative investor underwriting are slowing down capital flows. The office sector is especially affected by this uncertainty, particularly in markets where significant policy rate increases are still having an economic impact. Global leasing volumes in the third quarter of 2023 were similar to the previous quarter but 6% lower than the same period last year and 24% below the pre-pandemic average. Vacancy rates increased due to declines in North America and Europe, despite positive net absorption in Asia Pacific. In the logistics sector, activity also cooled in North America and Europe as occupiers reassessed their portfolios. Despite the slowing economic growth, retailer sentiment and hospitality have been supported by a recovery in international travel and resilient consumer spending. Challenging conditions are expected to continue into 2024, but there is anticipation for greater stability to emerge next year, with lower inflation and the start of an interest rate cutting cycle.