At the recent BOMA Medical Real Estate Conference, I had the opportunity to hear an eye-opening keynote from Dr. Marci Rossell, former Chief Economist at CNBC and co-host of Squawk Box. Her talk addressed how global economic trends, trade, and demographics intersect with commercial real estate (CRE) investment sales today…specifically medical office investment properties.
One of her core messages was that headline GDP figures often mask deeper realities. The GDP deflator, for example, has jumped from 2.5% to 3.5%, indicating rising inflation that impacts CRE valuations, cap rates, and investor expectations. With inflation pressures mounting, we’re seeing higher construction costs, tightening yields, and the need to recalibrate deal structures.
She also warned that while tariffs and policy shifts don’t immediately cause recessions, they slowly erode growth and increase costs over time. This long-term drag can compress returns and challenge underwriting assumptions, making conservative financial modeling crucial for CRE investors.
Dr. Rossell highlighted the dramatic shift in global trade patterns, noting that China now supplies a significant share of U.S. imports. This has clear implications for CRE—particularly in terms of supply chains for building materials and equipment, which affect development timelines and construction costs.
A major demographic shift is also underway: in 2025, 4.1 million Americans will turn 65, compared to 1.5 million in 2000. This aging trend is fueling demand for medical office properties, senior housing, and healthcare-focused assets—a wave that savvy CRE investors should be prepared to catch.
The housing market remains tight, with home prices quadrupling since 2000 and local regulations restricting new supply. This creates opportunities for multifamily, mixed-use, and alternative housing developments to fill the gap.
A crucial warning from Dr. Rossell was about the national debt, currently at 7% of GDP. If financial markets lose confidence, we could see higher borrowing costs, tighter lender scrutiny, and a premium placed on cash-flowing, stabilized assets.
Finally, Dr. Rossell pointed out how media negativity can distort economic sentiment. While headlines amplify fear and pessimism, the fundamentals of CRE—centered on healthcare, housing, logistics, and retail—remain resilient and essential.
In today’s evolving macroeconomic landscape, success in CRE investment sales demands that we adapt, anticipate, and guide clients through these shifts. Let’s stay focused on the long-term fundamentals and move forward with clarity and confidence.
Justin Langlois, CCIM is a Commercial Real Estate Advisor with Stirling Investment Advisors servicing Baton Rouge, Louisiana and surrounding markets. Please reach out to Justin to discuss your real estate investment strategies.