YEAR-END 2024 marks the 19th quarter since COVID fundamentally changed the way we work and do business. Few industries have felt this impact more acutely than commercial real estate.

Debates over the merits of remote versus in-person work are still a flashpoint. Industry leaders pack panel discussions – where words like “vibes,” “positive thinking” and “feelings” have replaced typical jargon like “deals” and “effective rent.”

INVESTORS AND ECONOMISTS generally expect at least a quarter point cut in the federal funds rate by year-end. Although we cannot ignore the compounding effects of inflation, at Perry CRE, we are approaching the second half of 2024 with cautious optimism. While the labor market is still relatively strong, signs of macroeconomic cooling are beginning to emerge. Headline inflation growth fell 30 basis points (bps) between May and June, while the unemployment rate ticked up 10 bps to 4.1% in the same time frame.

SOLID PAYROLL GROWTH and slight declines in both inflation and the unemployment rate continue to reflect an economy still climbing out of the crater left by the pandemic – and following a tepid growth path. Seven million jobs have been created since January 2022 – a remarkable pace, but just a fraction of the 22 million jobs lost due to COVID. GDP growth averaged 1.8% over the last 4 years – compared to 2.4% average growth between 2014 and 2019. And while inflation has declined nominally, we are still 1.2 percentage points away from the Fed’s target.

So far, there is no evidence of even a mild recession. Many market analysts (including this one) have spent the last two years looking for indicators to confirm the US economy was either in a recession or about to enter one. With inflation and hiring cooling, but wages rising and unemployment still declining, it is possible that the most anticipated economic event in recent history may not even happen.