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.
Amid an improving economy, the commercial real estate market continues to recover, marked by rising occupancy across all commercial property markets.
There is strong recovery in the multifamily, industrial, and retail property markets, while the recovery has not been as robust in the office and hotel property markets.
Expect elevated vacancy rates in the office market but low vacancy rates in the multifamily, industrial, and retail market in the next 12 months.
Sustained job creation, more consumer spending, and the continuing return of the workforce to the office underpinned the commercial real estate market's recovery across all property sectors in the first half of 2021.
Commercial real estate acquisitions during January through May 2021 rose 1% compared to one year ago as investors acquired multifamily properties, hotels, and seniors housing.
Year-to-date through April 2021, commercial transactions were 10% below the level one year ago. Commercial real estate prices continue to firm up, but valuations were still broadly down by 5% in April compared to January 2020.
The commercial real estate market is recovering, although commercial real estate transactions and the underlying market fundamentals are still weak compared to pre-pandemic conditions.
Despite the continued economic recovery and the accelerated vaccine distribution, commercial real estate acquisitions fell 59% in February as the lingering impact of the pandemic kept investors at the sidelines.
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