These days, we seem to be surrounded by cautionary forecasts. For example, in a recent post about U.S. REITs, Fitch Ratings indicated that it expects to see slower growth in the sectors that have been growing, and additional challenges in the sectors that have been challenged. Hardly a surprise announcement from a ratings agency with new ratings forthcoming... There have also been recent headlines about investment funds grappling with redemption requests and rising interest rates. Euphemisms such as "headwinds", and catchphrases such as "never try to catch a falling knife", are certainly having their moment to shine! But despite the anecdotes about commercial real estate players taking a wait-and-see approach through the end of 2022 and into the new year, if you dig a little deeper beneath the surface, a different story takes shape: clients are still chasing opportunities of all shapes and sizes, working closely with their trusted advisors in real time to evaluate things like whether a little pref equity or mezz debt or a brief period of all-cash ownership can bridge a gap in pricing, leverage or capital stack; law firm practice groups are still focused on productivity, but with a bit more attention to internal development, client trainings and building and maintaining relationships in place of missing billable hours; and, perhaps most importantly, people are getting together to collaborate, trade stories, expand networks, and just catch up and enjoy each other's company. So this December, even though there may be downgrades and shortfalls, I'm happy to see people working hard to get ahead while also prioritizing family, friendships and community during the holiday season, and am focusing on that bright side as we head into 2023.
"Fitch expects slower growth for sectors that had been experiencing solid demand, including industrial and open-air shopping, and more difficult conditions for others that have been challenged, including office..." The rating agency anticipates the balance of its rating outlooks for REITs will move to negative as ratings are stabilized subsequent to downgrades.