Top 10 Commercial Real Estate Trends for 2023

Top 10 Commercial Real Estate Trends for 2023

by Commercial Property Executive - Jeffrey Steele, Shaun Pappas Quoted

In 2022, spiking interest rates, inflation and a war in the Ukraine brought considerable change to commercial real estate and the U.S. economy overall. With interest rates and values eventually stabilizing, and all stakeholders rethinking the highest and best use of their property and capital, this year promises to be an interesting one, too.  Here are 10 trends likely to shape the events and transactions of 2023.

Rezoning Frenzy

In U.S. cities that zone commercial real estate, developers are prodding city councils to consider rezoning some districts to residential, said Shaun Pappas, a partner at Starr Associates LLP.

This trend has been underway for some time in Manhattan. Pappas believes it will become a greater movement as commercial vacancies increase and residential real estate continues being squeezed. With the housing market stifled by rising mortgage rates, creating more housing development opportunity could ease home prices.

Green Goals

Almost 40 percent of U.S. greenhouse gas emissions derive from building construction and operation, said Eve Picker, crowdfunding platform founder & CEO. Developers and property managers must ensure building efficiency and sustainability, or risk being ignored by tenants and financiers alike.

“The new normal isn’t just about embracing ‘green,’ it’s about avoiding ‘red,’” Picker said. “If your operational or development costs start to show up in that color from a maintenance or climate risk standpoint, you’ve got no hope of being in the black.”

Credits and Incentives

As companies look to rebound from the pandemic, tax credits and incentives should play an even more vital role in launching projects, said Nancy Cox, partner and real estate industry leader for Top 50 accounting firm The Bonadio Group. To maximize profits, CRE execs will need to consider Low-Income Housing Tax Credits, Qualified Opportunity Zones and Historic and Brownfield Tax Credits, she said.

Stable Market

In the coming year, commercial real estate buyers and sellers will encounter a more stable market likely to furnish buyers with greater options, said Tomas Sulichin, president of the commercial division at RelatedISG Realty. The market, he believes, will be characterized by a slight increase in inventory.

“In the past years, buyers and tenants have been at the hands of owners and landlords,” he said. “We will soon see a market stabilization. These are all good signs of a healthy real estate market, which is cyclical.”

Top Tenants

Commercial real estate owners will aim to ink golden anchor tenants to long-term leases, Pappas said. “There’s a big push for long-term leases with significantly established tenants in restaurant spaces, technology or other types of ‘experience’ leasing, such as large fitness centers and spas,” he noted.

“I see commercial landlords looking for those types of tenants that are established and sacrificing significant rent or providing significant tenant allowances so they can lock in long-term leases.”

Transaction Restart

With high interest rates producing elevated cap rates and declining asset values, there will be insistence on higher returns on real estate investments than on alternatives providing less risk and more liquidity. “Illiquidity demands a premium, and that’s become more and more apparent as rates rise,” said Ran Eliasof, founder & managing partner of Northwind Group.

“We’ll see more transaction volume take place in 2023,” he continued. “Some lenders will force the hands of borrowers to make the transactions a reality, and there’ll be refis of deals done four years ago…not everyone will walk away happy.”

Race to Bottom

Prospects for office real estate will continue to be clouded, with occupancies lower and office tenants re-evaluating their needs in the face of remote work.
“It may get worse before it gets better; that trend will hold,” said Mitch Rosen, managing director and head of real estate for New York City-based Yieldstreet. “I think there’s somewhat a race to the bottom on price for some of the more inferior buildings. You’re not competing anymore on what the tenants are looking for. You’re competing on dollars. There are tenants for that appeal, but not high enough quality or quantity.”

15-Minute Cities

The pandemic deepened economic pressures and social inequalities existing before COVID-19, leading Americans to seek greater access to amenities, activities or job opportunities nearer their homes.

“The idea of the 15-minute city, where you can do all things you need to do within 15 minutes, has taken off since the pandemic,” said Karin Brandt, founder & CEO of coUrbanize, a community engagement platform for real estate development.

Brownfield Cleanups

ESG’s impact on real estate will be reflected in an increase in brownfield cleanups. In New York State, for example, the Brownfield Cleanup Program incentivizes the remediation and redevelopment of eligible contaminated properties by letting taxpayers reduce their taxable income by the cost of eligible cleanup expenses in the year they’re incurred.

“The credit is for between 22 and 50 percent of qualified remediation project costs and/or 10 to 22 percent of eligible construction costs,” Cox explained. “The credit percentage varies based on the version of the program the project qualifies for and the level of contamination.”

The credit can be claimed for various time lengths depending on credit component following the issuance of a certificate of completion by the New York State Department of Environmental Conservation.

Flight to Quality

Some forget, Rosen said, that there is still plenty of dry powder in real estate that will need to be invested in the next 24 months, referring to the “tens and hundreds of billions” raised in 2021 and 2022.

“It will be a flight to quality, better assets, better markets,” he said. “If you own superior assets the liquidity should be better than in tertiary markets and poorer assets. A rising tide lifts all ships. The first to see that investment will be the better-quality assets.”




  • Arthur Stern
    Cogswell Realty

    Our team has had the pleasure of working with Starr Associates on our project at 150 Rivington Street.  The entire Starr team was a tremendous asset to the success of our project.   Through very challenging times, Starr Associates came through time and time again.  It is an honor to work with everyone at Starr!

  • Ian Schrager
    Ian Schrager Company

    I have known Allan Starr for many years and worked with him on many projects.  He has always exceeded my expectations.  He not only knows the ins and outs of the law, but knows how to make the whole process easy and quick.   I’ve found him to possess an incredibly astute legal mind, combined with a common sense approach that always accomplishes my goals.  He’s not only a gentleman and a friend, but a brilliant lawyer.


  • Emily Beare

    It has been an absolute pleasure working with Allan Starr and Samantha Sheeber over the past twelve years. They are not only the utmost professionals, but also wonderful people who I have grown to love like family. I trust them with all of my new development projects and private clients, and we support each other in our business and personal lives. Starr Associates LLP has always been there for me and my clients and I would recommend them as highly as I recommend anyone.

  • Andrew Berkman, Counsel
    Milstein Properties

    Allan and I have worked together for decades; along the way, I have worked with Samantha Sheeber, Andrea Roschelle, John Rodriguez and Erica Starr and have always been pleased with their quick and accurate responses. They have worked with us on closings (with great and efficient results), restatements of stale plans, amendments and other assorted AG requirements, always on a timely and cost-effective basis.

  • David Penick, Vice President

    “Working with Starr has been great on three condo projects in Manhattan to date.  The accessibility and direct attention of the partners is unsurpassed.  Allan and Sam have the interests of the owner at heart and make every effort to protect our interests in a responsible and defensible manner.  Their practical approach and deep knowledge of the offering plan process and requirements of the AG office combine to make a highly effective and efficient package.  At the associate level they have good support as well.  The closing office has to be the best in NY – never a failed closing in 15 years.  We are repeat customers and will be going forward.”

  • James Lansill, Senior Managing Director
    Corcoran Sunshine Marketing Group

    “Samantha Sheeber is a partner in making transactions successful. She’s resourceful, respected, smart, funny as hell, and is swift to constantly embarrass us (and clients) because she sees the end while we all muddle in the middle. She saves time. She is selfless and fast and conscientious. She’s loyal to the notion of selflessly getting stuff done. She cultivates great talent. And she makes the process fun, even when she is mad at us for asking the same impossible question 11 times hoping for a new result (a solution for which — by the way — she often discovers).”

  • Ben Shaoul
    President, Magnum Real Estate Group

    “As an active developer in New York City, Magnum Real Estate Group is proud to have partnered with Starr Associates, LLP as our legal counsel in 5 significant projects valued at approximately $800 million.  Over the last 5 years, Starr has provided us with exceptional advice on condominium Offering Plans and related transactions. Partner Samantha Sheeber, Esq. and her team have professionally guided us, and provided creative and effective solutions when needed.”

  • Susan DeFranca, President & CEO
    Douglas Elliman Development Marketing

    “I have had the fortunate opportunity, over the past 16 years, to work with Allan Starr and Samantha Sheeber who I consider to be experts in the field of real estate law.  They, together with their team, have a deep understanding of Attorney General Offering Plan registrations and continually seek to identify creative solutions to complicated issues.  Their level of integrity and commitment are unwavering no matter how large or small a project. I completely endorse Starr Associates LLP and look forward to our mutual continued success.”

  • Michael Rudder
    Rudder Property Group

    “Starr Associates’ specialty in the creation and representation of condominiums is unmatched. Their knowledge, experience and professionalism in the office condominium sector is best-in-class. Starr Associates’ hard work and expertise has been critical to the success of our firm’s office condominium projects.”

  • Charles Bendit
    Co-CEO Taconic Investment Partners LLC

    “Starr Associates have been our condominium attorneys for many years. Their counsel goes well beyond just drafting the condominium documents, which of course they do extremely well. They also represent us and our brand with condominium unit purchasers, and with our lenders and partners on condominium related matters. We have always found Starr’s attorneys to be professional, responsive and cost-conscious.”