Has Commercial Real Estate Performance Turned the Corner?

Has Commercial Real Estate Performance Turned the Corner?

Nov 4

Written By Christian Desnoes

Apartment and Office Sector Performance Defy Expectations

U.S. Multifamily Market Momentum Defies Expectations
- U.S. multifamily vacancy fell in 3Q 2024, despite record completions
- Apartment demand was robust in 3Q 2024, with net absorption reaching the strongest level since mid-2021
- A persistent housing shortage and improved economic sentiment are sparking household formations and fueling rental demand

Regional Absorption Patterns Highlight Sunbelt and Key Metros
- Sunbelt markets lead in multifamily net absorption, due in part to their high concentration of new unit deliveries
- Vacancy compression is notable in markets with fewer completions and solid demand, like D.C., Portland, OR, and San Francisco
- Multifamily demand expected to keep pace with construction in 2025, likely sustaining these regional trends and declining U.S. vacancy

Office Sector Exhibiting Gradual Rebound
- U.S. office net absorption reached a near-2-year high in 3Q 2024, reducing the national vacancy rate
- Minimal new construction should continue to support vacancy compression; however, fundamentals are moving slowly
- Return-to-office policies becoming more prevalent, providing a potential tailwind, but office tenant demand appears bifurcated

*Through 3Q
Sources: Marcus & Millichap Research Services, RealPage, Inc.