Commercial Real Estate Market Update Q2 2017

As spring arrives, the market for commercial real estate continues to do well. The downside is that we may be nearing the peak of the current cycle in both the office & industrial market.

The industrial market as a whole absorbed a little over 2.600,000 SF of space in 2016. Vacancy rates continue their downward trajectory and have fallen to approximately 7% in the metro area. However, a quick look at development trends suggests a peak may have been reached. Developers have clearly shifted from ‘spec’ development to ‘build-to-suit’ projects as demand has leveled off. What does this mean for Landlords & Sellers? Landlords are having increased activity, see increasing rents/prices, and are limiting concessions for new tenants.

The outlook for office market is following the same path. Office space in the North Loop & West End areas remain hot and rents are increasing across the metro. Employers are continuing to re-evaluate their space to attract top talent. The trend is towards collaborative workspaces that include fewer private offices, more open space and buildings with worker-friendly amenities.