Market Data

Market Trends

Briefly Noted

Hospitality — With more money available for construction lending, Pittsburgh has become a mecca for limited-service hotels, with the number of rooms increasing more than 1,000 percent since 2007, according to a analysis of STR data. Other markets experiencing exponential hotel growth include Scranton, Pa., southern Missouri, and San Jose and Santa Cruz, Calif.

Industrial — Overall industrial rents are expected to increase by 26 percent in the next three years, as vacancy rates continue their decline to 7.1 percent in 2017, according to Cushman & Wakefield. At the same time, 380 msf of new product is expected to come online, with a number of 1 msf-plus big boxes being built in both major and secondary markets.

Multifamily — Concerns about overbuilding are “mostly exaggerated,” according to Cassidy Turley. Given the fact that homebuilders have been underbuilding relative to household formation by 40 percent for the past five years, CT predicts the 1Q14 4.0 percent vacancy rate ticking up to 4.3 percent by year-end and 4.5 percent by 2015, with the majority of this year’s 160,000 new units absorbed by 2016.

Office — While 17 msf of trophy office space is under construction in the U.S., most of it is concentrated in New York, Houston, and San Francisco, according to JLL. Of the 40 other markets it tracks, JLL reports an average of less than 200,000 sf under construction. Growing demand sets the stage for rent growth in the next couple of years: 10 markets now have single-digit class A vacancy rates, with seven showing no development in progress.

Retail — In 2013, new shopping center completions increased for the first time since 2007, according to Cushman & Wakefield, with 400 new centers bumping up the total gross leasing area by 12.7 percent. During the next three years, the U.S. will add 758 new centers, Canada, 42, and Latin America, 115.

Most Attractive Investment Option

Significantly higher cap rates for stabilized class B assets have perked investor interest, according to CBRE’s “Investor Intentions Survey, 2014.” While a majority of respondents (57%) chose opportunistic/value-added assets, 20 percent of investors chose class B assets, compared to 17 percent for class A core assets and 6 percent for distressed assets.

“New construction [bank] properties with long-term ground leases are in the highest demand amongst 1031 exchange investors and private buyers as they offer long-term leases to investment grade tenants with historically low lease default rates.” - The Boulder Group

“As the global economy recovers, the potential flow of funds into commercial real estate is staggering.” -Peter Linneman, chief economist, NAI Global


Building Progress

Fall 2020

Moody's Analytics Reis Chief Economist Victor Calanog, Phd, CRE, outlines how construction in many sectors will fail to meet expectations for 2020.

Read More

This Is the Altered Normal

Fall 2020

Esri’s data on consumer behavior, demographics, and employment can help real estate adapt in the COVID-19 world.

Read More

Market Trends in Commercial Real Estate

Summer 2020

Office Renters Change Priorities in Wake of Pandemic | Recreational Real Estate on the Rise | Case Study: COVID-19's Impact on Eastern PA Big-Box Market | Hospitality Owners Have Reservations as Occupancy Drop | Seniors Housing Responds to Mounting Pressure from Pandemic | Mixed-Use Developments Can Keep It Local | Supply Chain Reacts to Social Distancing | Self-Storage Weathers Early COVID-19 Storm

Read More

The CMBS Stress Test

Summer 2020

The commercial mortgage-backed securities market is particularly vulnerable amid the COVID-19 pandemic, with borrowers and lenders looking for creative solutions to unprecedented problems.

Read More