Real estate industry outlook

Demand for electric power in the United States has proliferated in recent years due to several driving factors: the rise of artificial intelligence and the subsequent need for data centers, increased adoption of electric vehicles (EVs), green energy production, far-flung renewable energy sites and federal efforts to reduce carbon and greenhouse gas emissions. As this load growth continues to increase, so too do the hurdles on the supply side. It is clear the electric grid is becoming a bottleneck to bringing more clean energy online.

In response, agencies like the Federal Energy Regulatory Commission are streamlining regulations and creating opportunities for contractors to take on projects amid the backlog. To position themselves for these projects, contractors must understand the qualification requirements tied to funding and tax credits to ensure continued benefit eligibility. Here’s an overview of the key acts that led to the current situation, and the trends at play.

The office sector is facing an uphill battle. Since the outbreak of the COVID-19 pandemic five years ago, it has seen a worldwide shift to hybrid work, a constrained financial market with limited transaction volume, heightened borrowing costs and diminished investor interest. Now, while some investors may avoid the office market completely to minimize risk, others recognize an opportunity to discover untapped value and potential returns as the sector adjusts. Meanwhile, a surge in upcoming loan maturities is driving the need for substantial capital.

The U.S. housing market started 2024 with optimism as builder sentiment improved and mortgage rates dipped below 7%, but rising interest rates and home prices soon dampened this outlook. A persistent undersupply of homes, worsened by homeowners holding onto low-interest-rate mortgages and affordability challenges, has constrained home construction. Despite a housing shortage exceeding 3.5 million units, builders have limited new construction due to subdued demand and affordability issues. Home prices and rents have surged, making it difficult for average Americans to buy homes, especially with mortgage rates more than double pandemic-era lows. While construction material prices have eased, offering some relief to builders, affordability remains a major hurdle for potential homebuyers.