March 2022 Market Update

March 2022 Market Update

The multifamily market appears poised for another solid year in 2022, although it’s unlikely to match 2021’s exceptional performance.  Some $166 billion of multifamily transactions were completed in 2021, up 75% from 2020.  After asking rents rose 13.5% nationally in 2021, rent growth will probably be closer to 5% in 2022.  With occupancy rates near record highs, builders will deliver 400,000 more units in 2022.

The growth of the industrial sector is set to continue in 2022.  This year, it will be less about rising asset values, and more about rising rents.  Rents are up 17 percent in Chicago from this time last year.  The cost of industrial space is spiking largely because there’s so little available, despite developers having churned out a huge amount of new products in 2020 and 2021.  Vacancy nationwide is under 5%.

Retail sales and foot traffic have rebounded to pre-pandemic levels.  National retail leasing reached its highest levels in four years in 2021, with landlords signing deals for more than 240 million square feet.  Still, retail landlords and their tenants face challenges with supply-chain bottlenecks, severe labor shortages, e-commerce, and upended consumer habits.

Chicago office buildings remain lightly used almost two years into COVID-19.  According to keycard data, only one-third of workers report to the office.  There is 96.5 million square feet of available office space in the Chicago area, which is 18.9% of the total inventory.  That is an increase of more than 13 million square feet since the onset of the pandemic in early 2020. Overall vacancy is 15.4%.

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