Commercial Market Insights

Commercial real estate started the new year on a slow note with lower demand, smaller rent price gains, and higher vacancy rates.

Commercial real estate performed well overall in 2022 but this year will be challenging for most commercial real estate market sectors.

Inflation, interest rates, supply chain, and geopolitical events will largely determine how commercial real estate performs in the coming months.

The pace of absorption has slowed in the industrial and retail markets as consumers cut back on spending amid high inflation.

Strong fundamentals in property segments of the multifamily, office, industrial, and retail markets are likely to keep the commercial market recovery going; the hotel market is expected to slow.

The commercial real estate market continued to see rising occupancy, rents, and investor acquisitions in February 2022, with the impact of the Russia-Ukraine war and upswing in interest rates still likely to manifest in the coming months in some commercial segments.

All core commercial sectors — multifamily, office, industrial, and retail — experienced net positive absorption December 2021 through February 2022.

The recovery in the commercial real estate market that started in the second half of 2021 is continuing into the first month of 2022.

Despite the office sector continuing to shed office space in the face of strong job recovery, 2021 can still be considered a year of growth and potential thanks to demand for multifamily rentals, industrial space, off-premise sites for brick-and-mortars, and investment acquisitions.

The commercial real estate market has continued to recover on all fronts on the back of the sustained recovery in the job market, increased consumer spending, and workers trickling back to the office.