The 2024 Q2 North America Market Report by Lee & Associates highlights some key differences between the U.S. and Canada, such as a stronger multifamily market in the U.S. and more consistent demand for office space in Canada. However, there are also common themes across both countries as we approach the end of 2024. Connect CRE spoke with CEO Jeffrey Rinkov, based in Westlake Village, CA to discuss these overarching trends.
Q: The industrial market in the U.S. saw a significant decrease in net absorption during the first half of 2024 compared to last year’s numbers. Is this decline due to an increase in inventory or a decrease in tenant demand?
A: The contraction seen within the industrial market is primarily due to flattening demand and new inventory being delivered into certain areas of both countries at once.While there are still strong pockets of demand throughout North America, vacancy rates have increased mainly because new buildings were already planned before Covid-19 hit causing major disruptions within supply chains.However,the recent uptick indicates that corporate site selection is on an upward trend.
Q: In comparison with other sectors like industrial or retail which have seen rising demands lead to increased construction activity; why hasn’t retail experienced similar growth? Are there any signs that this may change soon?
A:The commercial real estate industry has consistently witnessed high levels of consumer interest towards experiential shopping even after Covid-19 restrictions were lifted.This has led us believe that we will see more development projects coming up soon especially since rental rates continue their steady climb while vacancies remain low.Another sign pointing towards future growth includes increasing business travel volumes along with hospitality sector success.
Q: Do you think apartment rent prices will eventually return back pre-pandemic levels nationally?
A:The multifamily sector appears stable now,and it seems likely rents could reach pre-pandemic norms sooner than later.As employees start returning back work,vacancy rates in urban core multifamily units have dropped while tenant incentives have decreased, and we are seeing early signs of rent growth.
Q: Irrespective of the property type or market, what are some key themes that Lee & Associates is emphasizing to its clients in 2024?
A: Our professionals continue to witness creative trends within commercial real estate. The potential for lower interest rates has led to an increase in sale transactions with buyers and sellers coming closer on their expectations.Data center assets remain highly sought after by both investors as well as occupiers,and there is also a significant demand for cold storage capacity.Retail properties continue to attract strong interest from investors,and we’ve even seen a rise in office space demand from occupiers.
