Lee & Associates has released their 2024 Q2 North America Market Report, highlighting the differences between the U.S. and Canada’s real estate markets. While the multifamily market in the U.S. remains robust, there is steadier demand for office space north of the border. However, both countries share common themes as we approach the end of 2024.
Connect CRE spoke with CEO Jeffrey Rinkov based in Westlake Village, CA to discuss these high-level themes that he and his team are focusing on.
Q: The industrial market in the U.S. saw a significant decline in absorption during 2024’s first half compared to last year’s numbers. Is this due more to an increase in inventory or a decrease in tenant demand?
A: The contraction seen within our industrial market can be attributed to two main factors – flattening demand and new inventory being delivered into various markets across both countries.While certain areas continue to experience strong levels of tenant activity throughout North America , overall vacancy rates have been increasing primarily because of new construction projects that were planned during Covid-19 when supply chain disruptions occurred.However, recent signs indicate that there is an uptick happening with increased corporate site selection activities taking place.
Q: In comparison to other sectors such as industrial or retail which have seen rising demands lead towards more construction projects; why hasn’t retail experienced similar growth? Do you foresee any changes occurring soon?
A: Retail has consistently shown impressive performance within commercial real estate even beyond Covid-19 times.Consumers continue showing interest towards physical shopping experiences along with experiential opportunities.As vacancy rates remain low while rental prices accelerate upwards; it seems likely we will see further development take place over time.This trend also reflects through higher volumes related business travel/vacationing success stories from hospitality sector clients who show continued interest for additional investments into this asset class.
Q: Do you believe apartment rent growth will eventually return back to pre-pandemic levels nationwide?
A: Multifamily rates are currently showing signs of stability and growth each quarter.As more employees return back to their offices, urban core multifamily properties have seen a decrease in vacancy rates along with tenant inducements; indicating the beginning stages of rent growth.
Q: Regardless of property type or market, what are the key themes that Lee & Associates’ brokerage professionals are emphasizing to clients during 2024?
A: Our team has noticed several creative trends emerging within commercial real estate. The prospect for lower interest rates is encouraging increased sales transactions while narrowing gaps between buyer/seller expectations.We’ve also seen high demand for data center assets from both investors and occupiers as well as an increase in cold storage capacity requests.Retail remains a popular asset class among buyers while we’ve even observed some uptick related office space needs from tenants.
