As the economy continues to recover, the commercial real estate market is starting to turn around as well , showing a modest uptick in sales and prices in the third quarter. However, a full recovery is still a long way, and the recovery and the impact of the pandemic has been bifurcated by property sector and geography. While office and retail (brick and mortars) occupancy has fallen by 62.5 million square feet, industrial property occupancy has more than offset that loss, with occupancy increasing by 113 million square feet as e-commerce continues to accelerate.
The big cities are showing apartment rent declines while smaller cities are showing rent growth. For example, in San Francisco, Seattle, New York, and Boston, rents are down over 15% from one year ago, while rents are up in smaller cities like Boise, Huntsville (Alabama), Virginia Beach, and Fayetteville (North Carolina).
Needless to say, the outlook for the commercial real estate market depends crucially on when a vaccine is discovered, how long it will get fully disseminated, and the evolution of the work from home culture. It appears that there will be a bigger impact only if companies allow their workers to work from home permanently as workers will want to permanently relocate to less expensive cities.
This issue looks at the latest trends across the commercial property markets (multifamily, office, industrial, and retail) and features two
pieces on apartment rent trends and how financial volatility impacts commercial sales and prices.
Read the full report from NAR HERE