Strong Demand Drivers Deliver Impressive 2Q CRE Performance
Underlying Demand Drivers Bolster CRE Performance
- Economic growth and job recovery unlocking pent-up household formation and consumer spending
- National housing shortage and aging Millennial population likely to maintain rental market momentum
- Retail spending rising; holiday season expected to further boost spending and demand for warehouse space
Commercial Real Estate Already Reaping Benefits in 2Q
- In 2Q, Apartment sector saw record unit leasing activity and its greatest quarterly rent growth since 1999
- Industrial vacancy fell to 5.0% despite adding 60M sq.ft.; outlook remains strong as eCommerce drives sector
- Subdued construction and conversion of some vacant space helped Retail vacancy fall for first time in 3 years
Recovery Underway, But Potential Headwinds Linger
- Office absorption was positive for first time since 1Q 2021, but vacancy rate still in line with Financial Crisis peak
- Outlook highly dependent on return to office; rising COVID cases could further delay timeline to return
*As of 2Q 2021
Sources: Marcus & Millichap Research Services, RealPage, Inc., CoStar Group, Inc.