Market Reports

Fourth quarter 2023 closed with a direct vacancy rate of 3.73%, an overall vacancy rate of 4.05%, and an average asking direct rental rate reported at $7.75 per sq. ft. NNN. In December, the Michigan unemployment rate was recorded at 4.3%, identical compared to this time last year. The US job market continues to remain resilient despite an uncertain economy and elevated interest rates. In October, employers posted 8.9 million jobs tumbling to the lowest level since March 2021, while in December openings slightly increased with employers posting 9 million jobs, compared to 8.8 million in November. Recent data indicates a gradual movement towards a balanced pre-pandemic job market with hiring remaining steady and limited number of layoffs. University of Michigan economists are projecting a full recovery of jobs for Michigan by early 2024, followed by two years of growth and a decline in terms of inflation. US consumer inflation eased slightly in November, while consumer confidence to some degree increased during December. The Michigan economy holds steady despite facing several challenges throughout the year including an automotive strike, supply chain shortages, and elevated interest rates bearing an impact on loans and US home sales. The Federal Reserve closed out 2023 with the decision to keep the key interest rate unchanged since the last increase of 0.25% in July and appear to be confident in a “soft landing” of the economy in 2024.


Fourth quarter 2023 closed with a direct vacancy rate of 21.54%, an overall vacancy rate of 24.22%, and an average asking direct rental rate reported at $19.02 per sq. ft. In December, the Michigan unemployment rate was recorded at 4.3%, identical compared to this time last year. The US job market continues to remain resilient despite an uncertain economy and elevated interest rates. In October, employers posted 8.9 million jobs tumbling to the lowest level since March 2021, while in December openings slightly increased with employers posting 9 million jobs, compared to 8.8 million in November. Recent data indicates a gradual movement towards a balanced pre-pandemic job market with hiring remaining steady and limited number of layoffs. University of Michigan economists are projecting a full recovery of jobs for Michigan by early 2024, followed by two years of growth and a decline in terms of inflation. US consumer inflation eased slightly in November, while consumer confidence to some degree increased during December. The Michigan economy holds steady despite facing several challenges throughout the year including an automotive strike, supply chain shortages, and elevated interest rates bearing an impact on loans and US home sales. The Federal Reserve closed out 2023 with the decision to keep the key interest rate unchanged since the last increase of 0.25% in July and appear to be confident in a “soft landing” of the economy in 2024.


The commercial condominium sector in Edmonton is attracting an increasingly diverse group of occupiers and investors, while owners benefit from overall cost-savings and growing equity. Since 2020, ownership of commercial condo units has increased year-over-year (y-o-y) – surpassing 2019 levels in 2022 and posting further y-o-y growth in 2023.


In recent years, ownership of commercial condo units has increased significantly in the Calgary market. Several formats – office, industrial and retail/ medical are available and can be found in a variety of options from units in small, multi-tenant buildings to dedicated business parks – all of which provide distinct advantages such as fixed and clear costs, complete control over design within the premises, and notably, tax benefits not available to leasing tenants.


Availability in Calgary’s Beltline office market increased ever-so-slightly during the final quarter of 2023. A spike in sublease availability resulted in approximately 20,000 square feet (sf) of negative net absorption. The new space introduced to the market was primarily available for sublease and located in polar opposites of the size spectrum: pockets measuring 2,000 – 4,000 sf and in large 10,000+ sf spaces. With such a small net change in overall occupied space, total occupied space in the Beltline remained largely consistent with the previous quarter at 75.7%.


Overall availability – and particularly the vacant component – of Downtown office space decreased through the fourth quarter of 2023 on approximately 395,000 square feet of positive absorption. Calgary’s Downtown office market is indeed getting healthier as observed by the ongoing, albeit slow, increase in staff returning to their offices on Mondays and Fridays.


Overall availability – and particularly the vacant component – of Calgary’s suburban office market decreased slightly through the final quarter of 2023, posting a 1% drop due to approximately 288,000 square feet of positive absorption. We saw tenants making leasing decisions based on two primary considerations: finding locations that make the to-and-from-work commutes easier for staff and acting on necessity to secure spaces in the size ranges they wanted while still available, especially in A-Class properties.


Calgary’s retail vacancy rate remained stable through the fourth quarter of the year, showing no overall change despite significant activity and changes within its constituent parts. Several new developments were added to our inventory, with notable additions including the final phase of The Shops at Buffalo Run, plus smaller retail plazas like New Brighton Landing and mix-use developments such as Shawnessy Station and Solo on 4th.


Investors’ interest in the Calgary market remained remarkably strong through the final quarter of 2023, during which an additional 88 transactions closed at or above $1 million, for a total of $719.2 million. For the year, total dollar volume invested reached just under $3.4 billion. While this represents a decrease of approximately $153 million or 5% percent year-over-year, the negative calculation is due entirely to the 2022 sale of The Bow (sale announced in 2021, finalized in 2022) inflating last year’s investment numbers. Removing that outlier, we see investment up year-over-year (y-o-y) across the board.


Edmonton’s commercial real estate (CRE) market was awash with investor activity during 2023. Tracking sales equal to or exceeding $1 million, the number of sales increased among each of the office, retail, industrial, multi-residential and ICI/ residential land asset classes, driving year-overyear transaction numbers up by 18%. Total dollar volume increased to more than $3.02 billion, a substantial 36% boost compared to investment in 2022.


Despite the ongoing softening the industrial market is experiencing at both the national and local levels, there are few reasons for pessimism regarding the long-term health of the sector. Numerous sources of data show leasing velocity slowing and vacancies climbing across the country, but in many ways this cooling represents a return to normalcy after years of pandemic related upheaval.


MODERATE MARKET ACTIVITY AMID HIGH UNCERTAINTY: In Q3/23, Chicago’s CBD occupancy levels and gross asking rates remained relatively unchanged from the prior quarter. The office market’s direct vacancy rate was 19.8%, while the average gross asking rate held at $44 p.s.f. Absorption levels turned negative this quarter at -432,000 square feet, resulting in year-to-date absorption levels at -933,000 square feet.


Investors’ interest in the Calgary market remained quite strong through the third quarter of 2023. During the quarter, 85 transactions closed at or above $1 million, for a total of $468.8 million. To September 30th, total dollar volume invested reached $2.56 billion.


The theme of Q3 was ‘cautious optimism’, with some activity taking place as tenants continued seeking the best-appointed spaces Calgary’s Downtown has to offer, but at a slower pace than during the previous quarter. The primary drivers of quarter-overquarter vacancy reduction were sublease space takeback and inventory reduction as several office-to-residential conversion projects under the City’s Downtown Development Incentive Program (DDIP) are underway or set to begin in the near future.


Calgary’s overall retail vacancy rate continued to demonstrate remarkable consistency through the third quarter of 2023, remaining settled in the high-three to low-four percent range seen over the previous few years. The primary contributor to Calgary’s vacancy is the vast inventory of street front spaces which have proliferated in recent years as small, local shopping destinations and mixed-use developments have gained favour over power centres.


The Denver office market continues to face demand challenges. As of 23Q3, Denver ranks among the worst performing office markets in the U.S. with a vacancy rate of 15.5%, surpassing levels reached during the Great Recession. A high concentration of tech companies has made Denver even more susceptible to office downsizing as they look for ways to cut expenses in lieu of reducing staff that was difficult to secure amid ongoing labor shortages.


Denver's retail market has staged a quiet, yet strong comeback, giving the sector runway to withstand a potential slowdown in the year ahead. Contributing to this comeback was the significant lift in consumer spending coming out of the pandemic. Denver's retailers now have a fresh set of headwinds to contend with in 2023. High inflation, rising consumer debt, and a high interest rate environment are weighing on purchasing power, creating challenges for local retailers. But today's retail market is entering into this uncertain season from a position of strength.


This retail snapshot of Oklahoma City is a survey of over 300 retail spaces within the Downtown Business Improvement District. Areas included are Midtown, Automobile Alley, West Village, City Center, Deep Deuce and Bricktown. Food and beverage currently dominate downtown.


The retail market, both nationally and locally, appears to be nearing an inflection point that will see the market move from surprising growth to more moderate growth and activity. Since the start of the recovery, retail has gained back all it lost in sales and then some. Occupancy has increased and there has been a significant influx of new tenants. Per CoStar, national retail vacancy sits at 4.2 percent near its all-time low.


Oklahoma City’s office market has experienced a dynamic first half in 2023, offering a blend of opportunities and challenges across its submarkets. The total market vacancy rate, which measures the unoccupied space in the market, has decreased from 25.2% at the year-end of 2022 to 24.7%. On the surface this would appear to be a positive sign, however, the overall absorption for the office market was a -11,146 SF. There is generally an inverse relationship between absorption and the vacancy rate, but this relationship can be affected by the removal of office buildings from the data set that were recategorized.


The commercial condominium sector in Edmonton is attracting an increasingly diverse group of occupiers and investors, while owners benefit from overall cost-savings and growing equity. Since 2020, ownership of commercial condo units has increased year-over-year (y-o-y) – surpassing 2019 levels in 2022 and posting further y-o-y growth in 2023.


In recent years, ownership of commercial condo units has increased significantly in the Calgary market. Several formats – office, industrial and retail/ medical are available and can be found in a variety of options from units in small, multi-tenant buildings to dedicated business parks – all of which provide distinct advantages such as fixed and clear costs, complete control over design within the premises, and notably, tax benefits not available to leasing tenants.


Availability in Calgary’s Beltline office market increased ever-so-slightly during the final quarter of 2023. A spike in sublease availability resulted in approximately 20,000 square feet (sf) of negative net absorption. The new space introduced to the market was primarily available for sublease and located in polar opposites of the size spectrum: pockets measuring 2,000 – 4,000 sf and in large 10,000+ sf spaces. With such a small net change in overall occupied space, total occupied space in the Beltline remained largely consistent with the previous quarter at 75.7%.


Overall availability – and particularly the vacant component – of Downtown office space decreased through the fourth quarter of 2023 on approximately 395,000 square feet of positive absorption. Calgary’s Downtown office market is indeed getting healthier as observed by the ongoing, albeit slow, increase in staff returning to their offices on Mondays and Fridays.


Overall availability – and particularly the vacant component – of Calgary’s suburban office market decreased slightly through the final quarter of 2023, posting a 1% drop due to approximately 288,000 square feet of positive absorption. We saw tenants making leasing decisions based on two primary considerations: finding locations that make the to-and-from-work commutes easier for staff and acting on necessity to secure spaces in the size ranges they wanted while still available, especially in A-Class properties.


Calgary’s retail vacancy rate remained stable through the fourth quarter of the year, showing no overall change despite significant activity and changes within its constituent parts. Several new developments were added to our inventory, with notable additions including the final phase of The Shops at Buffalo Run, plus smaller retail plazas like New Brighton Landing and mix-use developments such as Shawnessy Station and Solo on 4th.


Investors’ interest in the Calgary market remained remarkably strong through the final quarter of 2023, during which an additional 88 transactions closed at or above $1 million, for a total of $719.2 million. For the year, total dollar volume invested reached just under $3.4 billion. While this represents a decrease of approximately $153 million or 5% percent year-over-year, the negative calculation is due entirely to the 2022 sale of The Bow (sale announced in 2021, finalized in 2022) inflating last year’s investment numbers. Removing that outlier, we see investment up year-over-year (y-o-y) across the board.


Edmonton’s commercial real estate (CRE) market was awash with investor activity during 2023. Tracking sales equal to or exceeding $1 million, the number of sales increased among each of the office, retail, industrial, multi-residential and ICI/ residential land asset classes, driving year-overyear transaction numbers up by 18%. Total dollar volume increased to more than $3.02 billion, a substantial 36% boost compared to investment in 2022.


Investors’ interest in the Calgary market remained quite strong through the third quarter of 2023. During the quarter, 85 transactions closed at or above $1 million, for a total of $468.8 million. To September 30th, total dollar volume invested reached $2.56 billion.


The theme of Q3 was ‘cautious optimism’, with some activity taking place as tenants continued seeking the best-appointed spaces Calgary’s Downtown has to offer, but at a slower pace than during the previous quarter. The primary drivers of quarter-overquarter vacancy reduction were sublease space takeback and inventory reduction as several office-to-residential conversion projects under the City’s Downtown Development Incentive Program (DDIP) are underway or set to begin in the near future.


Calgary’s overall retail vacancy rate continued to demonstrate remarkable consistency through the third quarter of 2023, remaining settled in the high-three to low-four percent range seen over the previous few years. The primary contributor to Calgary’s vacancy is the vast inventory of street front spaces which have proliferated in recent years as small, local shopping destinations and mixed-use developments have gained favour over power centres.


The industrial vacancy rate for the first quarter of 2019 has shown a minimal increase to 5.50%, up 0.02% from Q4 2018, which was 5.48%.


“As we review and analyze 2018 Investments Sales activity and results in Calgary, one quote comes to mind: “Your big opportunity may be right where you are now.” by Napoleon Hill. Though 2018 results are better than 2017 and 2016 investment sales numbers, we still have a long way to go. The arrow, however, is pointing in the right direction.”


“Investors came back to Edmonton’s commercial real estate (CRE) investment market and liked what they saw in 2018. Total dollar volume invested exceeded $2.65 billion, driven by renewed interest in ICI Land, plus strong demand for Multi-Residential properties.”


“Investors are back and active in Edmonton’s commercial real estate (CRE) investment market in a meaningful way. Led by a resurgence of interest in ICI Land and an uptick in demand for Multi-Residential properties and Industrial assets, total dollar volume invested rose by 8% year-over-year.” -- Doug Grinde, Vice President, Barclay Street Real Estate


“Investors are back in Calgary’s commercial real estate (CRE) investment market and their wallets are open. Fuelled by a continued desire for retail assets and renewed interest in ICI and Residential Land, total dollar volume invested rose by 23% year-over- year.” -- George Larson, Vice President, Investment Sales, Barclay Street Real Estate


AT THE MID-POINT OF 2018, CALGARY’S RETAIL MARKET CONTINUED TO GRAPPLE WITH A FLOOD OF VACANT SEARS RETAIL SPACE THROUGHOUT THE CITY.


At the end of the first quarter of 2018, the industrial market of the Mexico City Metropolitan Area recorded an inventory of 9.6M SQM or 103.7M SQFT of Class A warehouses, concentrated mainly in the Cuautitlan 30%, Toluca 19%, and Tultitlan 17% submarkets.


The Mexico City Metropolitan Area Inventory for Class A+ and A Office buildings closed the 1Q of 2018 with a total inventory of 6.4 M SQM or 69.2M SQFT. This represents an increase of 11% equivalent to 603k sqm or 6.5 M SQFT.


Absorption over the fourth quarter totalled positive 86,000 square feet (sf).


Despite the ongoing softening the industrial market is experiencing at both the national and local levels, there are few reasons for pessimism regarding the long-term health of the sector. Numerous sources of data show leasing velocity slowing and vacancies climbing across the country, but in many ways this cooling represents a return to normalcy after years of pandemic related upheaval.


The tri-county area commercial market began the year trending positive with strong market fundamentals for all property types. Looking back at the quarter, and similarly to 2019 and 2020, the largest commercial sales in the market involved multi-family properties.


The tri-county area commercial market posted strong market fundamentals during the fourth quarter of 2020 for all property types. Looking back at the year and similar to 2018 and 2019, the largest commercial sales in the market involved multifamily properties. Although office tenants are evaluating what their mid- to long-term office footprint will look like in the future, overall office rents increased throughout the year. With the growth of consumer online shopping, industrial/flex tenants are continuing to increase their warehouse/distribution space. The retail market will continue to be supported by residential development. As we move into 2021, the continued expansion of the area driven by the steady population growth will see an influx of commercial real estate activity. Read on for more of the latest in the region’s commercial real estate market.


The effects of the coronavirus on the tri-county area commercial market remain unclear. Although data from the third quarter is providing greater clarity about local conditions and the short-term real estate outlook, there remains uncertainty surrounding market dynamics and long-term effects. Office Tenants are evaluating what their mid- to long-term office footprint looks like in a post-COVID world. With the growth of consumer online shopping, Industrial/ Flex Tenants are increasing warehouse/distribution space. The retail market will continue to be supported by residential development in our tri-county area.


The effects of the coronavirus outbreak on the tri-county area commercial market remain unclear. Although data from the second quarter is providing greater clarity about local conditions and the short-term real estate outlook, there remains uncertainty surrounding market dynamics and long-term effects.


The effects of the coronavirus outbreak on the tri-county area commercial market remain unclear. Prior to the coronavirus outbreak, the tri-county area had strong economic momentum, and the current report largely reflects the environment before the pandemic. It is too early to provide a quantitative assessment or forecast of the ultimate market impact of COVID-19. As with previous reports, our analysis focuses on the market activity reflected in current quarterly statistics. The overnight halt to the tourism industry will likely have repercussions for the local economy. In a year of evident political and economic uncertainty, we expect to see additional tempering in metrics — including asking rent growth and construction starts — as companies look for additional signals of where their businesses are headed this year.


TCN Worldwide's State of the Market: Eastern Edition, 3rd Quarter 2017 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide. In this edition: –National and Macroeconomic Overview –Regional Economic Conditions –Commercial Property Investment Trends


The Manhattan office leasing market ended the third quarter with more than 9 million square feet newly leased. The average rental price was $65.70, an increase from Q2. Of note, Landlord incentives provided to Tenants have also expanded and increased.


Absorption totaled 18,745 sq. ft. in the Second Quarter 2017. Solid figures considering the run this market has enjoyed over the past several quarters.


TCN Worldwide's State of the Market: Eastern Edition, 2nd Quarter 2017 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide. In this edition: –National and Macroeconomic Overview –Regional Economic Conditions –Commercial Property Investment Trends


The Manhattan office leasing market ended the second quarter of 2017 with a negative absorption of nearly 630,000 square feet, more than 1,000,000 square feet stronger than Q1. The vacancy rate citywide is now 8.2% having ticked downwards by 0.2% almost 1.5% stronger than the national marketplace. Average rents across the Manhattan office market fell to just below $60psf. The pricing correction and significantly lower negative absorption rate indicates a leveling of the office leasing market.


The Greater Harrisburg Market made significant gains in the First Quarter of 2017 as absorption totaled 55,196 sq. ft. As we enter the Second Quarter the suburban markets boast occupancy rates between 92% and 96%. We are encouraged by the increase in activity from our small business users and remain impressed with the outlook for owners of premier properties as opportunities dwindle for first class options.


TCN Worldwide's State of the Market: Eastern Edition, 1st Quarter 2017 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide In this edition: –National and Macroeconomic Overview –Regional Economic Conditions –Commercial Property Investment Trends


Markets continued their advance in 2016 as absorption totaled 250,333 sq. ft., its highest total in over 20 years. Since the First Quarter of 2010 the market has gained over 948,000 sq. ft. Rental rates have stabilized and market fundamentals have continued to strengthen.


TCN Worldwide's State of the Market: Eastern Edition, 4th Quarter 2016 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide In this edition: –National and Macroeconomic Overview –Regional Conditions in the Central States –Commercial Property Investment Trends


Going forward we expect continued firming of rates, steady demand and further modest improvement in most segments of the Greater Harrisburg marketplace.


TCN Worldwide's State of the Market: Eastern Edition, 3rd Quarter 2016 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide In this edition: –National and Macroeconomic Overview –Regional Conditions in the Eastern States –Commercial Property Investment Trends


2016 Q3 | STREET SMARTS (MHP, NYC)

THE NEW YORK CITY ECONOMY has not only kept pace with the national rebound; it has exceeded the U.S. measures throughout this decade. The most recent data, through the 2nd Quarter of 2016, shows New York outpacing the U.S. Gross City Product growth this year 1.7%, versus the national 1.2% rate in the second quarter. The City however, had stunning results in the prior three quarters, growing at 3.2% and 3.1% in the third and fourth quarters of 2015, and at 4% in the first three months of 2016.


TCN Worldwide's State of the Market: Eastern Edition, 2nd Quarter 2016 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN WorldwideIn this edition: –National and Macroeconomic Overview –Regional Conditions in the Eastern States –Commercial Property Investment Trends


Absorption totaled 27,101 sq. ft. in the First Quarter of 2016, solid numbers for a market which had tens of thousands of square feet come on line due to the Deloitte relocation this spring. We continue to remain cautious with our expectations for properties just out of receivership and anticipate potential volatility as new availabilities are introduced to the Suburban West Shore Marketplace.


Fourth quarter 2023 closed with a direct vacancy rate of 3.73%, an overall vacancy rate of 4.05%, and an average asking direct rental rate reported at $7.75 per sq. ft. NNN. In December, the Michigan unemployment rate was recorded at 4.3%, identical compared to this time last year. The US job market continues to remain resilient despite an uncertain economy and elevated interest rates. In October, employers posted 8.9 million jobs tumbling to the lowest level since March 2021, while in December openings slightly increased with employers posting 9 million jobs, compared to 8.8 million in November. Recent data indicates a gradual movement towards a balanced pre-pandemic job market with hiring remaining steady and limited number of layoffs. University of Michigan economists are projecting a full recovery of jobs for Michigan by early 2024, followed by two years of growth and a decline in terms of inflation. US consumer inflation eased slightly in November, while consumer confidence to some degree increased during December. The Michigan economy holds steady despite facing several challenges throughout the year including an automotive strike, supply chain shortages, and elevated interest rates bearing an impact on loans and US home sales. The Federal Reserve closed out 2023 with the decision to keep the key interest rate unchanged since the last increase of 0.25% in July and appear to be confident in a “soft landing” of the economy in 2024.


Fourth quarter 2023 closed with a direct vacancy rate of 21.54%, an overall vacancy rate of 24.22%, and an average asking direct rental rate reported at $19.02 per sq. ft. In December, the Michigan unemployment rate was recorded at 4.3%, identical compared to this time last year. The US job market continues to remain resilient despite an uncertain economy and elevated interest rates. In October, employers posted 8.9 million jobs tumbling to the lowest level since March 2021, while in December openings slightly increased with employers posting 9 million jobs, compared to 8.8 million in November. Recent data indicates a gradual movement towards a balanced pre-pandemic job market with hiring remaining steady and limited number of layoffs. University of Michigan economists are projecting a full recovery of jobs for Michigan by early 2024, followed by two years of growth and a decline in terms of inflation. US consumer inflation eased slightly in November, while consumer confidence to some degree increased during December. The Michigan economy holds steady despite facing several challenges throughout the year including an automotive strike, supply chain shortages, and elevated interest rates bearing an impact on loans and US home sales. The Federal Reserve closed out 2023 with the decision to keep the key interest rate unchanged since the last increase of 0.25% in July and appear to be confident in a “soft landing” of the economy in 2024.


MODERATE MARKET ACTIVITY AMID HIGH UNCERTAINTY: In Q3/23, Chicago’s CBD occupancy levels and gross asking rates remained relatively unchanged from the prior quarter. The office market’s direct vacancy rate was 19.8%, while the average gross asking rate held at $44 p.s.f. Absorption levels turned negative this quarter at -432,000 square feet, resulting in year-to-date absorption levels at -933,000 square feet.


This retail snapshot of Oklahoma City is a survey of over 300 retail spaces within the Downtown Business Improvement District. Areas included are Midtown, Automobile Alley, West Village, City Center, Deep Deuce and Bricktown. Food and beverage currently dominate downtown.


The retail market, both nationally and locally, appears to be nearing an inflection point that will see the market move from surprising growth to more moderate growth and activity. Since the start of the recovery, retail has gained back all it lost in sales and then some. Occupancy has increased and there has been a significant influx of new tenants. Per CoStar, national retail vacancy sits at 4.2 percent near its all-time low.


Oklahoma City’s office market has experienced a dynamic first half in 2023, offering a blend of opportunities and challenges across its submarkets. The total market vacancy rate, which measures the unoccupied space in the market, has decreased from 25.2% at the year-end of 2022 to 24.7%. On the surface this would appear to be a positive sign, however, the overall absorption for the office market was a -11,146 SF. There is generally an inverse relationship between absorption and the vacancy rate, but this relationship can be affected by the removal of office buildings from the data set that were recategorized.


Second quarter 2023 closed with a direct vacancy rate of 21.42%, an overall vacancy rate of 23.81%, and an average asking direct rental rate reported at $18.66 psf. In June, the Michigan unemployment rate was recorded at 3.6%, a decrease of 0.7 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 3.6%. Although inflation persists, interest rate hikes have remained consistent over the past year, and as employers target cost cutting measures, the labor market continues to maintain strength with fewer Americans applying for jobless benefits. 253,000 job openings occurred in April, 339,000 openings in May and a slight decrease in June to 209,000 openings, closing the quarter with 9.8 million total job openings in the U.S. In April, U.S. consumer confidence declined for the 3rd time in four months and again in May as individuals continue to become more discouraged by inflation, and by yet another increase of the key interest rate by the Federal Reserve totaling a quarter point to the highest it’s been in 16 years; however, they have indicated there may be a pause in further increases after 10 rate hikes which have had a costly impact on both businesses and consumers. Consumer price growth slowed in May rising only 0.1% from April, while mortgage rates approached a 7-month high, the quarter closes on an uneasy note as to how the remaining half of the year will unfold.


Second quarter 2023 closed with a direct vacancy rate of 3.69%, an overall vacancy rate of 3.95%, and an average asking direct rental rate reported at $7.36 psf. In June, the Michigan unemployment rate was recorded at 3.6%, a decrease of 0.7 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 3.6%. Although inflation persists, interest rate hikes have remained consistent over the past year, and as employers target cost cutting measures, the labor market continues to maintain strength with fewer Americans applying for jobless benefits. 253,000 job openings occurred in April, 339,000 openings in May and a slight decrease in June to 209,000 openings, closing the quarter with 9.8 million total job openings in the U.S. In April, U.S. consumer confidence declined for the 3rd time in four months and again in May as individuals continue to become more discouraged by inflation, and by yet another increase of the key interest rate by the Federal Reserve totaling a quarter point to the highest it’s been in 16 years; however, they have indicated there may be a pause in further increases after 10 rate hikes which have had a costly impact on both businesses and consumers. Consumer price growth slowed in May rising only 0.1% from April, while mortgage rates approached a 7-month high, the quarter closes on an uneasy note as to how the remaining half of the year will unfold.


The Chicago suburban office market showed signs of strength through the second half of 2022 as rental rates increased, absorption levels turned positive, and vacancy rates stabilized at approximately 27%. Although the vacancy rate is at a record high, the data remains distorted by zombie offices (typically outdated corporate campuses); one of which was sold in October for more than $230 million. The 1.4 million-squarefoot- campus in Northbrook, formerly the long-time home of Allstate, is being redeveloped into an industrial mega site. Developers must determine the highest and best use for these vacant office campuses, whether into more digestible-sized office product or into an entirely new asset class. These decisions will help mitigate oversupply issues while contributing to the long-term stability of Chicago’s suburban market.


In Q4/22, Chicago’s downtown office market vacancy rates and rental rates remained relatively unchanged compared to Q3/22. Absorption levels deteriorated, however, totaling 800,000 square feet of negative net absorption through the quarter. As a result, absorption levels through 2022 were negative 1.2 million square feet—an improvement relative to the negative 3 million square feet seen in 2021.


A number of leases were signed during the fourth quarter. First in Livonia, Cabinetworks Group, LLC inked a deal totaling 89,543 sq. ft. of Class B office space located at 20000 Victor Parkway. In Bingham Farms, Hondros College of Nursing signed a deal for 48,035 sq. ft. of Class B office space located at 30700 Telegraph Road in the Bingham Office Center. Lastly, in Ann Arbor, Tetra Tech, Inc., a global provider of consulting and engineering services leased 21,890 sq. ft. located at 1136-1138 Oak Valley Drive in the Valley Ranch Business Park.


Fourth quarter 2022 closed with a direct vacancy rate of 3.74%, an overall vacancy rate of 4.24%, and an average asking direct rental rate reported at $7.20 psf. In December, the Michigan unemployment rate was recorded at 4.3%, a decrease of 1.3 percentage points compared to this time last year, while the U. S. unemployment rate was recorded at 3.5%. Despite the Federal Reserve’s intentions to slow the demand for labor, wage gains and inflation with their continued interest rate hikes, the number of U.S. job openings in December was recorded at 11M, up from 10.46M in November as employers continued hiring at a solid pace. During fourth quarter, the U.S. economy grew by 2.9% and 2.1% throughout 2022, recording six straight months of stable growth. In December, indicators pointed towards the easing of inflation as consumer spending decreased by 0.2% from November along with a decline in consumer prices. It is expected the Federal Reserve will raise the key interest rate during 2023, with the number of increases to be determined. As inflation reached a 40-year high, seven interest rate increases were recorded during 2022 with the final increase of the year by half a point reaching the highest level in 15 years. Inflation remains one of the top economic concerns as consumers remain cautious, re-evaluate their spending habits and outlook towards saving and borrowing.


SUPPLY, MEET DEMAND. Multi-Tenant property has had its hay-day since first dropping N of 45% of vacancy from 2020-2021 (14.93% vacancy to 8.38%). With the vacancy rate bottoming out at a record shattering figure of 4.64% in 2022, it appears we may be headed towards stabilization. As any reasonable investor should expect, this sub-sect of the Industrial Market has seen its fair share of renovation and a large amount of spec construction. This race to meet the demand in tandem with a questionable political and economic outlook for the Country has been met with a marginal raise in vacancy to 5.42%. While this figure doesn’t swing the needle to indicate a over-supply in the market, it isn’t something to ignore either. With the Medical Cannabis industry tightening regulations and interest rates rising, this percentage may continue to creep up for a time. Regardless, this market is showing resilience and we believe it will continue to do so.


The multi-family market, more than any other, has been driven by the money funneled into the economy during the course of the pandemic. The shear level of money provided to renters through various pandemic programs combined with the broader economic stimulation led to some of the largest multi-family rent increases in our history. Oklahoma City has historically seen slow but steady rent growth; two to three percent annually. You could always count on it. In 2021, rent increased 12 percent. The increase was cut in half but still historically high in 2022, at 6 percent, with most of this moderation coming in the second half of the year. Clearly this wasn’t sustainable. What isn’t clear is where do we go from here.


Third quarter 2022 closed with a direct vacancy rate of 20.71%, an overall vacancy rate of 22.46%, and an average asking direct rental rate reported at $19.16 psf. In June, the Michigan unemployment rate was recorded at 4.1%, a decrease of 0.5 percentage points compared to this time last year. In August, U.S. job openings declined to 10.1 million, the lowest since June 2021, while adding 528,000 jobs, more than double economist’s original estimates of 258,000 jobs. In September, the hiring pace slightly declined due to higher rates and slower company growth with 263,000 jobs added and an unemployment rate of 3.5%, a decrease of 1.3 percentage points compared to one year ago. Year to date the Federal Reserve has increased the interest rate five times. The Federal Reserve has announced they will continue to aggressively institute rate increases until inflation declines and are confident that balance among the economy is being restored. Wall Street closed out the month of September down 9.3%, the worst month since March of 2020. Interest rate hikes have taken a toll on the housing market as home prices have decreased at an accelerated rate, long-term mortgage rates increased for 6 straight weeks by the end of September, and a 30-year rate was recorded at 6.7%, the highest in 15 years. Consumers, employers and the overall market remain aware and cautious heading into the fourth quarter as anticipation builds as the year is ready to close out.


Third quarter 2022 closed with a direct vacancy rate of 3.53%, an overall vacancy rate of 3.95%, and an average asking direct rental rate reported at $6.98 psf. In June, the Michigan unemployment rate was recorded at 4.1%, a decrease of 0.5 percentage points compared to this time last year. In August, U.S. job openings declined to 10.1 million, the lowest since June 2021, while adding 528,000 jobs, more than double economist’s original estimates of 258,000 jobs. In September, the hiring pace slightly declined due to higher rates and slower company growth with 263,000 jobs added and an unemployment rate of 3.5%, a decrease of 1.3 percentage points compared to one year ago. Year to date the Federal Reserve has increased the interest rate five times. The Federal Reserve has announced they will continue to aggressively institute rate increases until inflation declines and are confident that balance among the economy is being restored. Wall Street closed out the month of September down 9.3%, the worst month since March of 2020. Interest rate hikes have taken a toll on the housing market as home prices have decreased at an accelerated rate, long-term mortgage rates increased for 6 straight weeks by the end of September, and a 30-year rate was recorded at 6.7%, the highest in 15 years. Consumers, employers and the overall market remain aware and cautious heading into the fourth quarter as anticipation builds as the year is ready to close out.


First quarter 2022 closed with a direct vacancy rate of 3.9%, an overall vacancy rate of 4.26%, and an average asking direct rental rate reported at $7.79 psf. In March, the Michigan unemployment rate was recorded at 4.4%, a decrease of 0.7 percentage points compared to this time last year. As the U.S. job market nears full recovery, 431,000 jobs were added in March, the number of Americans applying for unemployment benefits reached a 52-year low, and the U.S. unemployment rate was recorded at 3.6%, a decrease of 2.4 percentage points compared to one year ago, the lowest rate since the beginning of the pandemic two years ago. However, U.S. inflation has surged to an increase of 7.9% over the past year currently standing at a 40-year high, long-term mortgage rates have risen to the highest they have been since 2019, while producer prices have increased 11.2% compared to one year ago due to higher energy costs leaving consumers around the country to feel the impacts, and U.S. confidence readings fell to the lowest level since 2011. The Federal Reserve announced plans to combat further inflation with increases to the interest rate, which has remained at zero since the beginning of the pandemic. In March, a 0.4% rate increase was issued with an advisory of six additional rate increases throughout 2022 totaling 1.9% and potentially 2.8% by the end of 2023 based on their median forecast, impacting higher loans for consumers and businesses.


First quarter 2022 closed with a direct vacancy rate of 20.59%, an overall vacancy rate of 22.00%, and an average asking direct rental rate reported at $19.39 psf. In March, the Michigan unemployment rate was recorded at 4.4%, a decrease of 0.7 percentage points compared to this time last year. As the U.S. job market nears full recovery, 431,000 jobs were added in March, the number of Americans applying for unemployment benefits reached a 52-year low, and the U.S. unemployment rate was recorded at 3.6%, a decrease of 2.4 percentage points compared to one year ago, the lowest rate since the beginning of the pandemic two years ago. However, U.S. inflation has surged to an increase of 7.9% over the past year currently standing at a 40-year high, long-term mortgage rates have risen to the highest they have been since 2019, while producer prices have increased 11.2% compared to one year ago due to higher energy costs leaving consumers around the country to feel the impacts, and U.S. confidence readings fell to the lowest level since 2011. The Federal Reserve announced plans to combat further inflation with increases to the interest rate, which has remained at zero since the beginning of the pandemic. In March, a 0.4% rate increase was issued with an advisory of six additional rate increases throughout 2022 totaling 1.9% and potentially 2.8% by the end of 2023 based on their median forecast, impacting higher loans for consumers and businesses.


Second quarter 2021 closed with a direct vacancy rate of 5.11%, an overall vacancy rate of 5.55%, and an average asking direct rental rate reported at $7.09 psf. In June, the Michigan unemployment rate was recorded at 5.0%, a decrease of 16.2 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 5.9%, a decrease of 5.2 percentage points from one year ago. U.S. job openings surged to a record high as available positions escalated to 9.21M in May compared to April’s 9.19M. As the economy begins to rebound, social activity begins to grow, and more individuals become vaccinated U.S. employers are in high demand to fill a growing number of positions yet continue to face challenges. Many employers have begun offering incentives and increased wages to attract new employees and retain existing ones. Despite the 5% increase in the consumer price index over the past year, the largest increase since 2008, additional indicators and resources are pointing to an improving economy. Indicators include available job openings, an increase in travel, a spike in U.S. home construction that increased from 3.6% in May to 6.3% in June, and a growth in the manufacturing sector despite issues with the supply chain.


Second quarter 2021 closed with a direct vacancy rate of 19.90%, an overall vacancy rate of 21.46%, and an average asking direct rental rate reported at $18.52 psf. In June, the Michigan unemployment rate was recorded at 5.0%, a decrease of 16.2 percentage points compared to this time last year, while the U.S. unemployment rate was recorded at 5.9%, a decrease of 5.2 percentage points from one year ago. U.S. job openings surged to a record high as available positions escalated to 9.21M in May compared to April’s 9.19M. As the economy begins to rebound, social activity begins to grow, and more individuals become vaccinated U.S. employers are in high demand to fill a growing number of positions yet continue to face challenges. Many employers have begun offering incentives and increased wages to attract new employees and retain existing ones. Despite the 5% increase in the consumer price index over the past year, the largest increase since 2008, additional indicators and resources are pointing to an improving economy. Indicators include available job openings, an increase in travel, a spike in U.S. home construction that increased from 3.6% in May to 6.3% in June, and a growth in the manufacturing sector despite issues with the supply chain.


The Denver office market continues to face demand challenges. As of 23Q3, Denver ranks among the worst performing office markets in the U.S. with a vacancy rate of 15.5%, surpassing levels reached during the Great Recession. A high concentration of tech companies has made Denver even more susceptible to office downsizing as they look for ways to cut expenses in lieu of reducing staff that was difficult to secure amid ongoing labor shortages.


Denver's retail market has staged a quiet, yet strong comeback, giving the sector runway to withstand a potential slowdown in the year ahead. Contributing to this comeback was the significant lift in consumer spending coming out of the pandemic. Denver's retailers now have a fresh set of headwinds to contend with in 2023. High inflation, rising consumer debt, and a high interest rate environment are weighing on purchasing power, creating challenges for local retailers. But today's retail market is entering into this uncertain season from a position of strength.


Although demand has returned since the start of 2023 after falling in the second half of 2022, household formation has been stymied by a combination of persistent inflation, rapidly rising interest rates, and rising unaffordability.12 Month Deliveries in SF: 2,446 12 Month Net Absorption in SF: 845 Vacancy Rate: 3.5% 12 Month Rent Growth: 3.0


In the first half of 2023, Bed Bath & Beyond and Tuesday Morning announced they were closing all of their San Diego area stores, impacting more than 300,000 SF of retail space.12 Month Deliveries in SF: 169 K 12 Month Net Absorption in SF: 114 K Vacancy Rate: 4.3% 12 Month Rent Growth: 4.9%


San Diego's office market is supported by a mix of defense contractors, healthcare providers, life sciences firms, and tech companies. Several top universities, including UC San Diego, the University of San Diego, and San Diego State University, provide a talent pool of job-seeking graduates and collaborative work with firms and research institutes.12 Month Deliveries in SF: 270 K 12 Month Net Absorption in SF: (997 K) Vacancy Rate: 11.3% 12 Month Rent Growth: 1.6%


Bringing more business activity back to Portland’s urban core will be essential for maintaining the city’s rising apartment profile. With most COVID-19 era restrictions lifted in March, dining, shopping and experiential offerings should draw more residents back to the central part of the city.


On March 12th, 2022, Oregon lifted its statewide mask mandate, marking an end to almost all of the State’s COVID-19 era business restrictions. As a result, retail demand in Portland is finally stabilizing and is positioning itself for a rebound in 2022. Barring any major setbacks from emerging variants, Portland might be heading back to a sense of normalcy in 2022.


The negative impacts of the COVID-19 pandemic continued to be felt deeply in the Portland metro office market. Demand for office space has continued to drop as a large segment of the workforce has shifted to a remote work model. Despite the drop in demand, year-over-year rent growth has returned with gains of 2.6%, while the national office rent gains are around 0.9%.


The rise in popularity of e-commerce and delivery services has greatly bolstered Portland’s industrial market during the COVID era. As a result, distribution and last-mile facilities will remain highly desired in the near- to mid-term. In order to combat supply chain issues that are impacting global markets, companies may look to shore up their domestic shipping assets. Several recent leases over 100,000 SF may be indicative of this trend.


Portland’s industrial market was better positioned than other markets to navigate the COVID-19 pandemic. This is thanks to the growth of e-commerce and delivery services in the wake of the pandemic. While vacancy and rent growth have softened by mid-year 2021, they are still at healthy levels.


The COVID-19 pandemic interrupted several years of sustained growth in the Portland market. Demand for office space in the Portland metro area remains low, as businesses continue to evaluate their space needs in the post-pandemic era. The central business district (CBD) was hit hardest by the pandemic. Many smaller businesses have sought to move out of downtown into areas such as Beaverton and Gresham, however, several major office leases have still been signed in the CBD in 2021.Portland’s office investment market has also remained slow through 2021 as a result of the pandemic. Annual sales volume exceeded $1 billion between 2015 and 2019, but that came to an end in 2020.


The COVID-19 pandemic brought immense challenges to the retail sector, which had already been struggling for years due to the growth of e-commerce. 16 months of intermittent lock downs and social distancing caused many retailers and restaurants to close. With the state officially reopened as of June 30th, Portland’s retail market could bounce back in response.


The Denver retail market has been a cyclical winner. Trade area demographics are supporting retail sales, with the metro's superior growth in population, employment, and income increasing buying power.


The Denver office market is in the midst of a moderate rebound. Rent growth slowed sharply throughout 2015 and 2016 as the market felt the full brunt of the collapse in oil prices, and rents at 4 & 5 Star properties briefly turned negative.


Several indicators emerged or firmed over the past year that point to rebounding demand in Denver's apartment market.


A confluence of events has led Denver to become one of the hottest industrial markets in the country. Robust demand in this regional market with a strong local economy is stemming from the growth of retail sales, employment, and industrial production in the metro area and the greater Colorado region.


The retail market in Portland did not experience much change during the second quarter. With the vacancy rate at 3.2%, net absorption was a positive 83,327 square feet and vacant sublease space increased by 29,737 square feet. There was a slight increase in quoted rental rates, ending at $17.35 per square foot per year. Seven buildings were delivered to the market and 1,129,274 square feet are still under construction.


The second quarter in the Portland Office market ended with a 6.6% vacancy rate. While net absorption totaled a positive 1,160,537 square feet, vacant sublease space increased to 334,810 square feet. The quarter finished with rental rates at $23.81, which remained the same from the first quarter. Five buildings were delivered to the market with 2,503,330 square feet under construction at the end of the quarter.


The second quarter has come to a close with a vacancy rate of 3.7%. Net absorption totaled a positive 713,455 square feet and vacant sublease space increased. Rental rates increased to $8.16 and nine buildings were delivered to the market. Those nine buildings totaled 552,369 square feet and 4,846,902 square feet remain under construction at the end of this quarter.


TCN Worldwide's State of the Market: Western Edition, 3rd Quarter 2017 Prepared by Hugh F. Kelly, PhD, CRE, Consulting Economist to TCN Worldwide. In this edition: –National and Macroeconomic Overview –Regional Economic Conditions –Commercial Property Investment Trends