Commercial Market Trends Q4 2023

by Scott Lyons

High-end hotel suite interior.

“Survive to 25” is the prevailing mantra as market conditions slow and cap rates increase for almost all market sectors (CBRE, 2023) before stabilizing towards the end of 2024.

Generally, the economy has continued to be more resilient than most economists have forecasted through the end of 2023. However, with interest rates projected to stay higher, longer, deal making has stalled in a significant way across the country.

Markets Trend


A recent survey by IBI has shed light on significant changes in workplace dynamics. In 2024, 90% of major companies are planning to reintroduce “return-to-office” policies and this shift comes on the heels of the challenges and disruptions caused by forced in-office regulations in 2023.

The predominant trend in the workplace is the adoption of a hybrid model, aimed at enhancing flexibility and optimizing productivity, employee engagement, job satisfaction, and retention. This trend has not only impacted office vacancies but has also given rise to the “Flight to Quality” concept. To facilitate the hybrid work model and attract talent, businesses are strategically relocating to smaller, more enticing office spaces with enhanced amenities. In particular, larger, well-capitalized firms are leading the charge in the steady growth of corporate campus construction, with an emphasis on creating iconic and sustainable headquarters that consolidate operational centers and serve as cultural hubs.

Market Trend

Adaptive Reuse

The adaptive reuse and repositioning of underutilized buildings, predominantly in the office sector, reached its peak in 2023 and is set to continue as a prominent trend.

This approach not only revitalizes struggling downtown areas but also champions a more environmentally sustainable method to meet the growing demand for new construction.

In 2024, experts forecast a significant 63% increase in upcoming adaptive reuse projects, with a particular focus on residential properties. Los Angeles stands out as a prominent hub for adaptive reuse, and similar projects are gaining traction in cities such as New York and Chicago.

A critical factor for success in adaptive reuse projects is early collaboration with the design team for thorough assessments of existing building conditions, leading to notable improvements in construction timelines and cost management.

Market Trend


The live/stay industry has experienced a shift in construction focus. Ground-up hospitality projects have decelerated in most cities, but there is a growing emphasis on renovating and expanding existing hotels to cater to the expanding business travel market.

Positive hotel revenue growth in the last quarter reinforces expectations for continued growth into 2024. Notably, many new mixed-use development opportunities are on the horizon, particularly in Texas, Florida, and Nashville. These ventures integrate Class A+ office spaces and retail but are more likely to move forward with the addition of high-end residential and an onsite hotel component.

These developments present promising prospects for the industry’s future but have more demanding returns on the larger-scale projects.

How Can We Help?

Our in-house subject matter expertise, capabilities, and experience uniquely allow us to deliver Commercial projects with greater predictability and quality under today’s demanding market needs.


Our prefabrication capabilities are proving out in real-time by delivering exceptional quality, time savings, improved safety metrics and taking significant labor hours offsite. More specifically, we’re implementing Surepods bathroom pods on all of our hotel projects along with prefabricated exterior envelope solutions both of which are resulting in improved quality and a faster delivery time. Read More about Prefab for Commercial

Development Services Group (DSG)

Based in Austin, TX, our DPR Development Services Group provides real estate and development consulting to companies, institutions or individuals engaged in the acquisition, disposition, and development of real estate. Our team has been educated and trained within this industry and across all facets of land use policy, design, and development. Our goal is to support our customers by providing site selection, site assessment, pre-development, entitlement management, land use, design management and civil engineering services. Read More about DPR's DSG

Q4 2023 Report Pages

Looking for more general market insights? Take a look at our full market conditions report of Q4 2023. Or take the full report with you by downloading the PDF.

Photos: Andrea Calo

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