United States Commercial Real Estate Market Thrives Amidst Industrial Growth and Urban Revival

Mordor Intelligence has published a new report on the United States Commercial Real Estate Market, offering a comprehensive analysis of trends, growth drivers, and future projections.

The United States commercial real estate market is poised for steady growth, with transaction values projected to increase from USD 1.70 trillion in 2025 to USD 1.94 trillion by 2030, reflecting a compound annual growth rate (CAGR) of 2.61% during the forecast period. This expansion is driven by robust demand in the industrial sector, urban economic recovery post-pandemic, and strategic investments in key metropolitan areas.

Report Overview: https://www.mordorintelligence.com/industry-reports/commercial-real-estate-market-in-usa

Key Trends

Industrial Sector Leading Demand

The industrial real estate segment has experienced unprecedented demand, characterized by exceptionally low vacancy rates and record-setting rental growth. The supply chain crisis has prompted reconfigurations, benefiting the industrial sector as businesses adapt to new logistics and distribution models. Since the onset of the pandemic, industrial leasing has surged by more than 24%, with vacancy rates dropping below the 4% threshold for the first time, reaching 3.8% in 2021. Net absorption rates have increased by over 81% year-over-year, totaling more than 496.3 million square feet, while average asking rents have risen to USD 7.11 per square foot, an 11.3% year-over-year increase.

Urban Office Markets Showing Resilience

Urban office markets, particularly in cities like Chicago, have demonstrated resilience amidst economic fluctuations. The Chicago suburban office market closed 2021 on a high note, with a 14% year-over-year increase in new lease transactions and improved capital market activity. Leasing activity saw a slight uptick quarter-over-quarter, with tenants favoring Class A offices, which accounted for nearly 70% of new leases executed in 2021. Despite challenges, the average lease term increased consecutively over the last three quarters, indicating growing tenant confidence in long-term commitments.

Strategic Investments and Property Sales

The commercial real estate market has witnessed substantial investment activity, with notable property sales contributing to market dynamism. In March 2022, Progressive Real Estate Partners announced the USD 8 million sale of The Grove, a Circle K-anchored neighborhood center in Redlands, California. Similarly, in February 2022, Shannon Waltchack acquired the 23,150-square-foot Gateway Plaza shopping center in Bloomingdale, Illinois, marking the sixth acquisition in their latest fund. These transactions reflect investor confidence and the strategic acquisition of properties with strong tenant mixes and favorable locations.

Market Segmentation

The U.S. commercial real estate market is segmented by property type and key metropolitan areas:

By Property Type:

Office: Encompasses spaces leased or owned for business operations, including corporate offices, coworking spaces, and administrative buildings.

Retail: Includes properties used for commercial retail purposes, such as shopping centers, malls, standalone stores, and restaurants.

Industrial and Logistics: Comprises warehouses, distribution centers, manufacturing facilities, and logistics hubs essential for production and supply chain activities.

Hospitality: Encompasses lodging facilities like hotels, motels, resorts, and extended-stay accommodations catering to travelers and tourists.

Multi-family: Includes residential properties designed to house multiple families, such as apartment complexes, condominiums, and townhouses.

By Key Metropolitan Areas:

New York: A major financial and cultural hub with a diverse real estate market spanning office spaces, retail establishments, and high-end residential properties.

Chicago: Known for its robust industrial base and a growing office market, particularly in suburban areas.

Los Angeles: Features a dynamic real estate landscape with significant investments in entertainment, technology, and logistics properties.

San Francisco: A technology-driven market with high demand for office and multi-family properties, despite recent challenges.

Boston: Home to a strong educational and healthcare sector, driving demand for specialized office and research spaces.

Denver: Experiencing growth in industrial and logistics sectors due to its strategic central location.

Houston: Dominated by energy sector investments, influencing demand for office and industrial properties.

Phoenix: Notable for rapid population growth, leading to increased demand in multi-family and retail sectors.

Atlanta: A transportation hub with a growing industrial real estate market, supported by extensive logistics networks.

Salt Lake City: Emerging as a tech-friendly city with expanding office and multi-family real estate developments.

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Key Players

The U.S. commercial real estate market is characterized by a diverse array of key players, including:

Simon Property Group: A leading real estate investment trust specializing in premier shopping, dining, entertainment, and mixed-use destinations across North America.

Shannon-Waltchack: A full-service commercial real estate firm offering brokerage, property management, and investment services, with a portfolio spanning multiple property types.

Progressive Real Estate Partners: Focuses on retail property brokerage services in Southern California, facilitating transactions for shopping centers and standalone retail properties.

John Propp Commercial Group: Specializes in commercial property management and brokerage services in the Denver metropolitan area, managing a diverse portfolio of office, retail, and industrial properties.

Mohr Partners: A global corporate real estate services firm providing tenant representation, lease administration, and consulting services to clients across various industries.

These companies are actively engaged in strategic acquisitions, property development, and offering comprehensive real estate services to meet the evolving demands of the market. Their diverse portfolios and specialized expertise position them to capitalize on emerging opportunities within the commercial real estate landscape.

Conclusion

The United States commercial real estate market is on a trajectory of steady growth, underpinned by the resilience of the industrial sector, the recovery of urban office markets, and increased strategic investments. As businesses adapt to evolving logistics and workspace needs, the demand for commercial properties remains strong across key metropolitan areas. With continued investment activity and technological advancements shaping the industry, the market is expected to offer lucrative opportunities for developers, investors, and stakeholders in the coming years.

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