For years, Quire has analyzed tens of thousands of Reports from dozens of market lines generated all around the world. As Quire works to provide productivity-enhancing solutions for Clients, we’ve developed unique time-tracking and process data from the firms that use our platform. We’ve created MarketWatch to share this data with report-writing professionals both in and outside the Quire solution.
How do Quire Clients anticipate business performance to look in 2023 as compared to 2022?
The latest MarketWatch (released in late February) reviewed 2022 Report Writing trends in Quire. Now looking forward, we’ve asked Quire Clients to share with us how they anticipate business performance to look throughout 2023.
Our findings showed 32.30% of survey recipients believe business will be down significantly when compared to 2022. Overall, 63.07% of survey recipients believed business would be down at least slightly from 2022. Why? We asked that too. Here’s what Quire Clients had to say:
Increasing Interest Rates and Costs for Buyers Significantly Impacting the Commercial Real Estate Industry
Rising interest rates can have a significant impact on the commercial real estate (CRE) industry, and specifically on the CRE due diligence industry. As interest rates rise, borrowing costs increase, making it more expensive for companies to obtain financing for real estate transactions. This can lead to a decrease in demand for commercial real estate, as fewer buyers are willing to pay higher prices for properties.
In turn, this can impact the CRE due diligence industry, as there may be fewer transactions and a reduced need for services such as property inspections, appraisals, and environmental assessments. Additionally, rising interest rates can also impact property values, which can make it more challenging for investors to accurately assess the risks and potential returns of real estate investments, further impacting the demand for due diligence services.
Here are a few quotes directly from Quire Clients regarding their 2023 outlook:
- “Increased interest rates + market instability”
- “Perceived Recession + Inflation”
- “Interest rates will squelch most commercial real estate for the time being”
- “Increased interest rates and CAP Rate compression resulting in tighter margins for clients. Deals facing more scrutiny in regard to increased equity participation. Clients still doing deals, but taking longer to develop”
- “Higher interest rates for commercial lending and high costs for purchases”
- “Contraction of CRE market in general due to uncertainties and additional interest rate increases”
- “I’m an independent contractor and with fewer transactions in CRE, we tend to get hit the hardest.”
- “Land values are inflated and interest rates are high!”
Some believed that though we’d see a slight decline overall throughout 2023, things will start to pick up come mid-year:
In addition, some Clients are experiencing a slower Q1, which leads them to anticipate a slow year overall.
Slow and Steady for 2023
- “We expect the last half of the year to pick up; however, we’re much slower than last year at this time.”
- “We saw a sharp drop off in demand after the summer and have been slow ever since.”
- “Already showing signs of trending down.”
- “The year has started slow and I anticipate business will increase but do so slowly through the rest of the year.”
A few even shared colorful comments that negative predictions are due to the existing political climate.
Other companies believe 2023 is looking up!
However – not all predictions are grim. At least 36% of survey respondents believe that 2023 business will be comparable or improved from 2022. When we asked them why, the responses were largely diversified. Some were specific to the respondent, indicating a diversified service line that would keep them moving through 2023, or already-improved metrics from Q1 2022 to Q1 2023.
- “Already busier than we typically are during this time of year and we are actively looking to add staff!”
- “While an appreciable portion of our business is influenced by rates, we have a diversified service offering.”
Others noted hope that the market would stabilize, or other service offerings within CRE Due Diligence compensating for the general industry decline (foreclosures, refinances, etc.). A few respondents even noted how external regulation factors could mean increased demand for ESA services.
- “Refinance of existing loans coming to term will be a big thing this year with interest rates where they are.”
- Anticipated change in interest rates may affect borrowing trends, refinances of portfolios will likely continue
- “New changes in regulation may cause an uptick in ESAs.”
In Like a Lamb, Out Like a Lion
Many noted that while they believed the first half of 2023 would see a decline, they had hope for market stabilization in Q2 and Q3, making 2023 business comparable or even improved from 2022.
- “In general, the financial markets bounce back. The GSEs should hit their quotas, even with the slow start.”
- “Hopefully the market will stabilize with a solid interest rate.”
We hope this Industry Pulse provided some perspective on how your peers, colleagues, and fellow Report Writers anticipate business for 2023! As a reminder, all data and quotes were collected prior to March 2023 and the banking crisis. Quire plans to collect additional perspectives on 2023 halfway through the year and compare perceptions.
If you haven’t already, check out the 2022 Year in Review from last month! Stay tuned for upcoming MarketWatch data as we analyze report writing metrics and key insights from Quire.