Commercial real estate forecast: Urban multi-family properties will rebound in 2021 | Business
NEW YORK – (BUSINESS WIRE) – May 3, 2021 –
Moody’s Analytics today announced new Commercial Real Estate Rental and Vacation (CRE) forecasts covering eight property types and over 3,000 submarkets across the United States. These forecasts reflect the latest Q1 data on CRE’s markets in the United States available via the REIS platform, the cornerstone of Moody’s Analytics CRE Solutions.
The outlook for the apartment sector has taken a positive turn, with effective rents expected to return to near pre-pandemic levels in 2022. National average effective rents have fallen from a record 3.0% in 2020 and are now expected to rise by 2.1% in 2021. Multi-family markets in dense urban areas such as New York, the Bay Area and Washington DC have been particularly affected by the pandemic, but have likely reached their rental low point and started to decline. straighten out. Meanwhile, vacancy rates in the United States are expected to stabilize this year, remaining at a national average of 5.2%.
“We anticipate that the combination of returnees and new movers, now attracted by lower rents, will be enough to stabilize the apartment sector in major urban centers,” said Thomas LaSalvia, senior CRE economist at Moody’s Analytics. the sector in these areas still has some way to go before the recovery. “
Great uncertainty surrounds the fate of the office sector, which will likely lead to continued distress this year. Vacancy rates are expected to reach 19.2% in 2021, surpassing the previous cyclical peak of 17.6% in 2010. National average effective office rents are expected to decline by 5.9% in 2021 due to the net effect of hybrid work during COVID-19, escalating a 0.6% drop in 2020.
Likewise, we expect the retail sector to continue to deteriorate in 2021, with national average effective retail rents set to decline a further 6.8%. Vacancy rates are also expected to hit a record high (12.3%) in 2021, as physical retailers struggle to compete with rising online sales.
As the retail sector suffers the consequences of the shift to electronic commerce, the outlook for the industrial sector is improving. “We expect the industrial sector to benefit from favorable winds from strong economic forecasts and the continued rise in e-commerce,” said Dr. LaSalvia, “The need to store inventory and meet consumer expectations for fast shipping will provide more than enough absorption to push rents up and vacations down. “
We now expect the national average effective rent for the industrial sector to increase by 3% in 2021, compared to our previous forecast of an increase of 0.2%. – the strongest rental growth expected among major property types. The industrial sector is also the only type of property with expected decreases in vacancy rates in 2021; we expect a drop of 40 basis points to 10.3%.
CRE market participants can access these forecasts through the Moody’s Analytics REIS platform and find out more on the Moody’s Analytics CRE Solutions Insights page.
About Moody’s Analytics
Moody’s Analytics provides financial information and analytical tools to help business leaders make better decisions, faster. Our deep risk expertise, vast information resources and innovative application of technology help our clients navigate with confidence in an ever-changing marketplace. We’re known for our industry-leading, award-winning solutions comprised of research, data, software and professional services, assembled to deliver a seamless customer experience. We create trust in thousands of organizations around the world, with our commitment to excellence, our open-minded approach and our focus on meeting customer needs. For more information on Moody’s Analytics, visit our website or connect with us at Twitter and LinkedIn.
Moody’s Analytics, Inc. is a subsidiary of Moody’s Corporation (NYSE: MCO). Moody’s Corporation reported sales of $ 5.4 billion in 2020, employs approximately 11,500 people worldwide and maintains a presence in more than 40 countries.
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CONTACT: Katerina Soumilova
Moody’s Analytics Communications
Moody’s Analytics Media Relations
KEYWORD: UNITED STATES NORTH AMERICA NEW YORK
INDUSTRY KEYWORD: PROFESSIONAL SERVICES RESIDENTIAL BUILDING AND REAL ESTATE FINANCING CONSTRUCTION AND REAL ESTATE URBAN PLANNING BANK
SOURCE: Moody’s Analytics
Copyright Business Wire 2021.
PUB: 05/03/2021 11:01 am / DISC: 05/03/2021 11:01 am
Copyright Business Wire 2021.