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U.S. commercial property - statistics & facts

The commercial construction industry in the United States has been steadily expanding since 2010 and in 2021, a total of 91 billion U.S. dollars’ worth of commercial real estate was built in the U.S. The commercial property sector was one of the many affected by the coronavirus pandemic: With the e-commerce sector continuously growing and hybrid working models as the new normal, it is not a surprise that the market has been experiencing major shifts in demand and supply. Though office has traditionally been one of the largest segments, industrial real estate has been growing in importance: In 2021, the value of construction starts of warehouses was over 26 billion U.S. dollars compared to about 19 billion U.S. dollars for office properties.

Has investment activity in the commercial property market recovered?

The pandemic brought waning investor sentiment, while international travel bans and regional lockdowns additionally contributed to the commercial property investment market shrinking in 2020. Nevertheless, in 2021, investment activity recovered and investment volumes exceeded 2019 and 2020 levels. Investors’ appetite was the strongest for multifamily, industrial, and office property, amounting to approximately 315 billion U.S. dollars, 160 billion U.S. dollars, and 136 billion U.S. dollars’ worth of investments, respectively. According to industry experts, some of the hottest markets for industrial real estate in 2022 are Cincinnati, Dallas/Fort Worth, Inland Empire, and Los Angeles. In the office real estate sector, the markets where investors were most interested to buy property were Nashville, Charlotte, and Denver.

What is the current state of the commercial property occupiers’ market?

During the pandemic, many businesses placed their upscaling plans or lease renewals on hold. The rising absorption rates for commercial property show that this trend is gradually changing. In the industrial sector, demand has been stronger than ever, with the vacancy rate remaining below the five percent threshold throughout 2021 and rents rapidly increasing. In contrast to the industrial sector, which benefitted from the rise of e-commerce, the retail sector was heavily impacted by the pandemic and suffered widespread store closures. As of the final quarter of 2021, malls had a vacancy rate of 8.3 percent. Though still below the levels before the pandemic struck, the office sector saw the vacancy rate drop from a staggering 17.2 percent in the second quarter of 2021 to about 12 percent throughout the rest of the year. Under the effects of the pandemic, rents declined in some of the major U.S. office markets, such as San Francisco, Boston, and Washington DC.

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