Solid Fundamentals for Commercial Real Estate in Second Quarter 2022 Despite Economic Uncertainties
August 31, 2022 | Ed Pierzak | Nareit
In the second quarter of 2022, continued solid fundamentals reflect an ongoing healthy demand for commercial real estate across most sectors, even as concerns about a slowing economy dominate the outlook.
• Despite uncertain economic conditions, the apartment and industrial sectors saw near-record and record levels of construction, respectively. The office and retail experiences were considerably more subdued.
• Net absorption continued to outstrip net deliveries for both industrial and retail, while apartment and office demand fell short of their respective supply counterparts. Although recovering, office has maintained a chronic struggle with demand since the pandemic.
• Market fundamentals have driven office and apartment vacancy rates higher, and industrial and retail vacancy rates lower. Despite the uptick, apartment availability remained tight. The industrial vacancy rate reached its all-time low.
• Commercial real estate rental growth rates maintained positive four-quarter gains across all sectors. The apartment and industrial sectors maintained four-quarter growth near or above double-digits. Retail and office rents continued their recoveries.
