Market Updates

Warehouse rents continue to rise as industrial real estate outperforms the rest of the market. The Wall Street Journal reports that even as vacancy rates have slowly increased, demand has remained high enough to keep rents increasing so far this year. While the pace of leasing has slowed down, it still remains above pre-pandemic levels and the overall metrics for the industrial sector are strong by historical standards. While the rest of the real estate market has cooled off as interest rates have risen, industrial has remained resilient.

The Federal Reserve declined to raise interest rates for now. However, it indicated that it expects to raise rates one final time by the end of the year. It also decreased the number of project cuts in 2024 from four to two, and the median outlook for 2025 rose by half a point. This is bad news for the long-term outlook for mortgage rates, as it may be a couple more years before they return to pre-2022 levels.

Major real estate brokerage RE/MAX settled a class-action lawsuit over commissions. They agreed to pay $55 million and admit no wrongdoing after being accused of inflating fees paid to its brokers. They are also changing their business practices going forward to no longer require sellers to pay the buyer agent’s commission. This comes only weeks after another defendant in the same lawsuit, Anywhere Real Estate (the parent company of Century 21, Coldwell Banker, Corcoran and others) paid $83.5 million to settle the claims against it.

After two years of rapid increases, farmland values in Illinois have leveled off. A study conducted by The Illinois Society of Professional Farm Managers and Rural Appraisers showed that excellent and good quality farmland showed no change in average price, while average and fair quality farmland showed a 2% decrease thus far in 2023. While this is just the data from one state, Illinois has the 4th highest amount of cropland in the country and other states, such as Iowa, have reported similar trends this year.