T
he real estate industry is bracing for a tough year ahead as it navigates unprecedented uncertainty, according to the Counselors of Real Estate's (CRE) annual Top Ten Issues report. Global elections, rising financing costs, and looming debt maturities are top concerns. A staggering $2.5 trillion in commercial loan debt is set to mature by 2026, forcing a reevaluation of property valuations and financing structures.

    "The days of free money are over," said Anthony DellaPelle, CRE's 2024 global chair. He predicts interest rates will not drop below 3% anytime soon, making mortgages unaffordable for many. The rising cost of property insurance adds to the uncertainty, with premiums increasing due to extreme weather events and property damage.

    Office vacancies are another pressing issue, with ripple effects extending beyond commercial real estate. A recent transaction saw a $32 million office building sell for just $8.5 million, highlighting the value reset occurring in many markets. This devaluation threatens local tax bases and could shift tax burdens onto residential property owners.

    The housing market faces its own set of challenges, including affordability and inventory constraints. Demographics play a role, with older homeowners choosing to stay put rather than trade up at higher interest rates. "Why would I sell my house and buy a new one, taking on a 7% mortgage?" DellaPelle asked.