The rise of remote work has resulted in an increase in vacant office space, particularly in downtown areas. According to a recent report from CBRE Economics Advisor, the retail availability rate for downtown markets was 88 basis points higher than suburban rates during Q3 of 2024. This is the largest difference since CBRE EA began collecting retail data over two decades ago.
However, it’s important not to make generalizations about commercial real estate as each market is unique. In a hexagon analysis of downtown retail performance across 19 cities, CBRE EA found that:
– Retail thrived when located near prime or trophy office buildings within “Prime Business” districts.
– These districts experienced stronger rent growth compared to their overall market.
– The “Vibrant Mixed-Use Districts” also performed well but had already high rent levels (74% premium) compared to Prime Business Districts.
– Even non-prime business districts outperformed their market average due to limited space availability and proximity to suburban office parks where consumers are spending more money.
Based on these findings, CBRE EA experts recommend considering investing in downtown district retail spaces near prime offices as they may see positive growth with improving office fundamentals. Despite the challenges faced by vacant offices and changing consumer behavior trends due remote work options,the potential for success still exists for retailers located within these bustling city centers.
This article originally appeared on Connect CRE .
