The combination of how three economic trends play out in 2023 will have a significant bearing on the commercial real estate market — and they may not be what you think.

The first, according to Marcus & Millichap's John Chang, is the University of Michigan Consumer Sentiment Index, which measures how people feel about their financial situation. In Q2 2022, sentiment fell sharply as gas prices surged and inflation surpassed 8% and hit a record low in June. At the same time, apartment demand fell from a positive 106,000 units in Q1 to a negative 71,000 units in the second quarter. But "the good news is that sentiment appears to be making a recovery, offering the prospect of renewed household formations in 2023," Chang says.

The second metric Chang will be watching: what happens with cash savings and the use of revolving credit.

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