Ongoing economic struggles, increased by the Federal Reserve’s interest rate hikes to battle inflation, are taking a toll. The Fed’s latest projections suggest that unemployment will be 4.5% in 2023 and 4.6% both next year and the one after. Remembering that unemployment was 3.5% in March, that is a big jump. And, turning a focus to CRE, unemployment isn’t a good sign.

Fewer people have money for rent, to shop, and otherwise do the spending that represents 68% of GDP and a fundamental driver for the general need to lease space. There’s been an ongoing assumption that the unemployment hits typically come for people with lower incomes, but memories of recessions past—and currently tech layoff patterns—suggest that those nearer the top of the wage and salary ladder can find themselves sent to the curb.

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Erik Sherman


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