High interest rates and economic uncertainty in the first quarter of this year contributed to lower absorption and declining rent growth in industrial, retail and multifamily sectors across the country, with some regional exceptions, according to Lee & Associates’ 2023 Q1 North America Market Report. Meanwhile office continues to struggle. The sector experienced its third-largest quarterly contraction since the beginning of the pandemic, as work-from-home preferences decoupled office occupancy from job growth numbers. The full Lee & Associates report is available (with further breakdowns of factors like vacancy rates, market rents, inventory square footage and cap rates by city) here. The analysis below provides an overview of four major commercial real estate sectors alongside trends, economic background and exceptions within each sector. Industrial Overview: Sharp Decline Hits First-Quarter U.S. Demand There was a sharp first-quarter decline in U.S. tenant demand for industrial space as wholesalers and retailers reconsider their inventory levels out of caution over the economic outlook. Net absorption in the first quarter totaled 39.4 million square feet, a 57 percent drop from the record set a year ago. The overall U.S. vacancy rate settled at 4.4 percent, an increase of 40 basis points from the close of 2022, comfortably …
Content PartnerDevelopmentFeaturesIndustrialLeasing ActivityLee & AssociatesMidwestMultifamilyNortheastOfficeRetailSoutheastTexasWestern
