Q1 2022 North America Market Reports

INDUSTRIAL OVERVIEW

RENTS PUSHED ON STRONG DEMAND

Strong demand for industrial space throughout North America continued in the first quarter. Vacancies fell to record lows and rent growth hit double digits. First-quarter net absorption in the U.S. totaled 92.8 million SF, up 25% year over year but down 35% from the last three quarters of 2021. Annualized rents rose 10.1% in the U.S. and the average vacancy rate fell to 4.1%. Part of that was due to a pause in new construction starts early in the pandemic.

However, once developers saw orders for consumer goods begin to skyrocket shortly after the lockdown, many made up for lost time. Currently, there are 816 million SF of new space underway in the U.S. with about 605 million SF landing on the market in the next four quarters. That’s a sharp increase from the total 342 million SF in completions since Q2 of last year. Nevertheless, even as new construction has ramped up to all-time highs, the availability of quality logistics space will remain tight. READ MORE >

OFFICE OVERVIEW

AWAITING ‘RETURN TO OFFICE,’ RECOVERY

After posting two straight quarters of modest growth and showing early signs of a recovery, the United States office market slipped into neutral in the first quarter and the national vacancy rate ticked up slightly to 12.3%, the highest since 2011. Tenants shed 468,602 SF in Q1 following net absorption gains of nearly 27 million SF in the second half of 2021, which ended the year 42.4 million SF in the red.

Even though leasing activity has improved, it remains below the quarterly average of about 115 million SF prior to the lockdown. Rent growth has been nil. Gains will have to wait until positive net absorption returns along with reductions of sublease space, which totals nearly 200 million SF. Although the supply pipeline has slowed somewhat, there still is plenty of spec product under construction with 40% of the 142-million-SF pipeline listed as unleased. Among markets with the most supply underway are tech centers such as Boston, San Jose, Austin and Seattle. READ MORE >

RETAIL OVERVIEW

STRONG GROWTH CONTINUES IN Q1

The North American retail market put on another strong performance in the first quarter as the sector continues to rebound. There were 23.4 million SF of net absorption in the first quarter in the 11.8-billion-SF U.S. market. That’s a fivefold jump from Q1 2021 and slightly more than the average of the last three quarters of 2021. The national average vacancy rate is 4.5%.

There has been consistent retail space demand in Canada, where annual net absorption remained positive throughout the pandemic, unlike the U.S. On the heels of last year’s 5.8 million SF of net absorption, Canada posted 1.3 million SF of Q1 growth. Its vacancy rate is 2.1%, a record low. READ MORE >

MULTIFAMILY OVERVIEW

RENTS, VALUES SOAR; DEMAND EASES

Following successive quarters of healthy demand for apartments, tenant growth in the first quarter slowed with the onset of the Omicron coronavirus variant and annual rent growth soaring into the teens. Apartment values have skyrocketed, with the national average sale price hitting $244,343 per unit in Q1, an 18.4% year-over-year increase.

First quarter net absorption totaled 54,170 units, down 39% year over year. In 2021 tenant growth totaled 697,963 apartments, an 83% jump over the previous record of 381,288 units in 2020. Average effective rents in Q1 were $1,572, up 13.7% year over year and 16.4% since the lockdown. Some Sun Belt markets, such as Tampa, Phoenix and Austin, saw annual rent hikes of more than 20%. READ MORE >

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