Robust absorption rates in commercial real estate market insights
Over the past 12 months through March 26, the apartment market demonstrated robust absorption rates, with a total of 571,669 units absorbed. This figure outpaced the supply side of the market, which only saw the delivery of 404,152 new units. The sustained strong demand and limited supply led to a continued low vacancy rate of just 5%. In turn, landlords and property managers were able to increase asking rents by an average of 11% year-over-year.
Indicative of the demand
The increasing rents are indicative of the strong demand in the market, which is likely fueled by a growing population and a preference for urban living. This trend is likely to continue in the near future, with experts predicting that the apartment market will remain competitive and potentially see further rental growth. However, it remains important for investors to keep a close eye on the supply side of the market and ensure that the demand for new apartments does not outstrip the availability of new units.
With more workers heading back to the office and amid sustained job growth, 22.1 million square feet (MSF) of office space absorbed since 2021 Q3. Occupancy is still down by 115 MSF compared to the pre-pandemic level. The decrease in occupancy pushed up the vacancy rate to 12.3%. Asking rents are up on average by 0.7% year-over-year, with rents up in nearly all 390 metro areas except in markets like New York, San Francisco, and Washington DC.
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