The commercial real estate market is worth nearly $21 trillion, but fewer workers in the office since the pandemic and the rise of remote work along with higher interest rates may lead to rough waters ahead and serious consequences. Office vacancies have more than doubled since before the pandemic in San Francisco and rising rates have cut down overall commercial property prices by 13% from 2022’s peak. Office prices have been hit especially hard with a 17.5% drop on these prices with an even larger drop of 20% – 30% still possible. Employees are spending less and less time in the office – sometimes above 30% less time – which has caused the demand for office space to plummet.
But institutional investors know that commercial real estate is still strong, with the exception of office space. Upsets in the market create new opportunities for those willing to look for them. Luxury brands, such as Givenchy, Hermes, and Gucci have all got their hands on new retail spaces in Manhattan. JLL’s industrial leasing activity in Q3 exceeded 1.1 million square feet and had their year-to-date volume 44.9% higher than all of 2021 combined.
Learn more about new trends in the commercial real estate market and an easier way to sell your commercial and business real estate together here.