Company: MMI
Filing Date: 2025-08-07
Form Type: 10-Q
Source: 0001578732-25-000040
Chunk: 53

Company: Marcus & Millichap, Inc.
Filing Date: 2025-08-07
Form: 10-Q
Item: Part I, Item 1
Chunk 53
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 790,000 units in the trailing 12 months – the strongest 12-month total in more than 30 years. If the pace of construction is further slowed by tariffs on construction materials and more stringent immigration policy reducing the available construction labor force, new supply risks would continue to abate, raising the prospect of strengthening multifamily fundamentals. Office demand has likewise continued to improve, marking a fifth consecutive quarter of positive space absorption. Though vacancy rates remain elevated for the sector as a whole, select sub-segments of office properties in a variety of markets continue to draw tenant demand. Retail space demand has modestly slackened, but the vacancy rate remains below 5%. Like retail space demand, hotel demand has eased, particularly as international travel to the United States has been impacted by trade policies. In addition, elevated uncertainty and weakened consumer confidence have impacted leisure travel. Should trade deals be established and policies normalized, confidence could improve and hotel room demand could quickly revive.

The commercial real estate space demand outlook remains difficult to discern amid the dramatic policy shifts enacted by the new U.S. presidential administration. Increased uncertainty, weakened sentiment and risks of a recession and higher inflation could slow decision making, causing commercial real estate space demand to falter. If policy clarity emerges, commercial real estate space demand could be reinvigorated. Nonetheless, all commercial real estate property types have entered the new cycle on sound footing, suggesting a durable performance outlook.

32

Capital Markets

Credit and liquidity issues in the financial markets have a direct impact on the flow of capital to the commercial real estate market. Real estate purchases are often financed with debt, and as a result, credit and liquidity impact transaction activity and prices. Movements of interest rates in one direction, whether increasing or decreasing, could adversely or positively affect the operations and income potential of commercial real estate properties, as well as lender and equity underwriting for real estate investments. These changes directly influence investor demand for commercial real estate investments and what they are willing to pay. Furthermore, the use of debt or loan-to-value ratios can shift along with lender confidence and underwriting standards. At times of heightened uncertainty or liquidity issues, loan-to-values decline, requiring buyers to provide more equity and take more risk to close deals.

Interest rate volatility following the rapid trade policy changes in early April has given way to range-bound movements, with the key 10-year treasury benchmark remaining near 4.5%. Interest rate risks have been exacerbated by President Trump’s threats to remove Jerome Powell as the head of the Federal Reserve, risking the independence