{"id":1634,"date":"2021-02-25T05:08:07","date_gmt":"2021-02-25T04:08:07","guid":{"rendered":"https:\/\/offices.net\/news\/?p=1634"},"modified":"2022-03-10T05:23:15","modified_gmt":"2022-03-10T04:23:15","slug":"2021-rental-vacancy-and-supply-rates-part-2","status":"publish","type":"post","link":"https:\/\/offices.net\/news\/2021-rental-vacancy-and-supply-rates-part-2\/","title":{"rendered":"United States Commercial Property Supply and Vacancy Rates 2021 (Part 2)"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-full wp-image-1635\" src=\"https:\/\/offices.net\/news\/wp-content\/uploads\/2021\/02\/pexels-veeterzy-1412235-1.jpg\" alt=\"\" width=\"700\" height=\"466\" srcset=\"https:\/\/offices.net\/news\/wp-content\/uploads\/2021\/02\/pexels-veeterzy-1412235-1.jpg 700w, https:\/\/offices.net\/news\/wp-content\/uploads\/2021\/02\/pexels-veeterzy-1412235-1-300x200.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/>In a previous blog post we examined the performance of the commercial real estate market in some major US cities. This is the second article in this series, which uses data from late 2020 and early 2021 to examine vacancy and supply rates in cities such as Los Angeles, Chicago, Atlanta and Houston. These statistics illustrate the impact of COVID-19 on the commercial property rental market, as well as the types of properties that are holding strong in the face of negative trends.<\/p>\n<p><strong>Los Angeles <\/strong><\/p>\n<p>Los Angeles is a hub for creative, media, and entertainment companies, many of which are office-based. The city\u2019s proximity to major cargo ports makes it convenient for logistics and distribution businesses, both of which have kept the industrial real estate market strong.<\/p>\n<p><em>Offices<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates <a href=\"https:\/\/www.cushmanwakefield.com\/en\/united-states\/insights\/us-marketbeats\/greater-los-angeles-marketbeats\">in downtown Los Angeles are 21.5%<\/a>.<\/li>\n<li>\u00a0In Q4 20202, there was more than 5.5 million square feet for vacant space, with 3.4 million feet being in the Financial District.<\/li>\n<li>\u00a0The majority of vacant inventory involves Class A offices.<\/li>\n<li>\u00a0Supply increased by more than 2 million square feet in the past 12 months.<\/li>\n<li>\u00a0No new supply is expected to enter the market as no projects are currently under construction in the CBD area.<\/li>\n<li>\u00a0Vacancy rates average 22.5% outside of the CBD, however, they reach 56% in the Fashion District.<\/li>\n<li>\u00a0Vacancy rates are just under 18% in the Greater Los Angeles area.<\/li>\n<\/ul>\n<p><!--more--><\/p>\n<p><em>Retail<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates average 6%.<\/li>\n<li>\u00a0Most of the supply has been absorbed by big box retailers, however, there is still an oversupply of retail space.<\/li>\n<li>\u00a0Downtown Los Angeles, Mid-Wilshire and Santa Clarita Valley have the most vacant space.<\/li>\n<\/ul>\n<p><em>Industrial<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates remain low at under 2.5%.<\/li>\n<li>\u00a0Demand for last-mile facilities has been particularly strong especially since mid-2020.<\/li>\n<li>\u00a0More than 4.5 million square feet are under construction.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Chicago <\/strong><\/p>\n<p>Chicago is among the top 3 largest office markets in the United States and is also one of the nation\u2019s leading retail markets. A robust transportation and logistics sector supports strong market performance for industrial properties.<\/p>\n<p><em>Offices<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates are <a href=\"https:\/\/www.savills.us\/research_articles\/256536\/309443-0\">pushing 14% and exceed 16% in the CBD<\/a>.<\/li>\n<li>\u00a0Downtown Chicago has nearly 20 million square feet of vacant space.<\/li>\n<li>\u00a0<a href=\"https:\/\/therealdeal.com\/chicago\/2021\/01\/05\/chicagos-q4-office-market-report-was-grim-tally\/\">Leasing activity is down by nearly 60%<\/a>, which has led to a major increase in the available supply.<\/li>\n<\/ul>\n<p><em>Retail<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates are just under 12% for the entire metro area.<\/li>\n<li>\u00a0Despite the increase in vacancy rates, the Chicago retail sub-market has delivered a better performance than other major urban centers in the US due to the strength of its grocery sector.<\/li>\n<\/ul>\n<p><em>Industrial<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates are just <a href=\"https:\/\/www.cushmanwakefield.com\/en\/united-states\/insights\/us-marketbeats\/chicago-marketbeats\">over 5.5%<\/a>.<\/li>\n<li>\u00a0Supply was quickly gobbled up due to the sharp increase in activity from big box retailers and e-commerce firms.<\/li>\n<li>\u00a0Build-to-suit space will lead new supply to be delivered in 2021 and beyond.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Brooklyn <\/strong><\/p>\n<p>Brooklyn has one of the highest retail densities of all New York boroughs, and its share of industrial facilities is also remarkable. However, office space is largely oversupplied.<\/p>\n<p><em>Offices<\/em><\/p>\n<ul>\n<li>\u00a0The available supply amounted to nearly <a href=\"https:\/\/www.ngkf.com\/storage\/uploads\/documents\/2Q20-Brooklyn-Office-Market.pdf\">16% of the total inventory<\/a>.<\/li>\n<li>\u00a0Both <a href=\"https:\/\/www2.colliers.com\/en\/research\/new-york\/brooklyn-office-market-report-3q-2020#:~:text=The quarterly availability rate for,(15%2C000 SF-sublet)\">total and sublet availability<\/a> have been climbing quarter after quarter.<\/li>\n<li>\u00a0Healthcare, government, and creative firms are taking up the majority of inventory.<\/li>\n<\/ul>\n<p><em>Retail<\/em><\/p>\n<ul>\n<li>\u00a0There is a widespread decline in rents across the borough due to increasing supply volumes.<\/li>\n<li>\u00a0More than 60% of tenants currently require <a href=\"https:\/\/www.rebny.com\/content\/rebny\/en\/research\/retail\/Winter_2020_Brooklyn_Retail_Report.html\">rent deferrals or relief<\/a> as a result of COVID-19.<\/li>\n<li>\u00a0Sales activity has dropped by more than 70%, resulting in the expectation of more <a href=\"https:\/\/www.terracrg.com\/2020\/04\/15\/report-brooklyn-retail-assets-covid-19\">store closures and increased vacancy rates <\/a><\/li>\n<\/ul>\n<p><em>Industrial<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates <a href=\"https:\/\/www.cushmanwakefield.com\/en\/united-states\/insights\/us-marketbeats\/new-york-city-area-marketbeats\">average 4.5%<\/a>.<\/li>\n<li>\u00a0Demand outstrips supply and an additional 1.7 million square feet of industrial space is under construction.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Atlanta <\/strong><\/p>\n<p>Georgia\u2019s capital city is home to numerous corporate headquarters, which benefit from access to a diverse office market. The city\u2019s excellent transportation links have contributed to Atlanta\u2019s booming industrial real estate market.<\/p>\n<p><em>Offices<\/em><\/p>\n<ul>\n<li>\u00a0<a href=\"https:\/\/www2.colliers.com\/en\/research\/atlanta\/atlanta-office-market-report-2020-q4\">Average vacancy rates are 14.5%<\/a>.<\/li>\n<li>\u00a0Sublease supply is at its highest level since 2009.<\/li>\n<li>\u00a0Buckhead has the highest amount of sublet vacant offices.<\/li>\n<li>\u00a0Supply and demand are balanced in Northlake, Central Perimeter, South, West and Northeast Atlanta.<\/li>\n<\/ul>\n<p><em>Retail<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates average <a href=\"https:\/\/www.avisonyoung.ca\/fr_CA\/market-report\/-\/ayr\/view\/atlanta-retail-report-q4-2020-\/in\/atlanta\">6.5% for metro Atlanta<\/a>.<\/li>\n<li>\u00a0In the CBD, vacancy rates are 3.6%, whereas in suburban areas they average 6.6%.<\/li>\n<li>\u00a0There is an imbalance between the delivery of new supply and take up rates, leading to negative absorption.<\/li>\n<\/ul>\n<p><em>Industrial<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates are <a href=\"https:\/\/www.ngkf.com\/storage-nmrk\/uploads\/fields\/pdf-market-reports\/4Q20-Atlanta-Industrial-Market.pdf\">below 7%<\/a> for the first time in two years.<\/li>\n<li>\u00a0Annual absorption amounted to 22 million square feet during 2020, however, supply shortages persist.<\/li>\n<li>\u00a0New supply is under construction, including 12 million square feet for warehouse &amp; distribution space and nearly 3 million square feet for R&amp;D facilities.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Houston <\/strong><\/p>\n<p>As one of the leading corporate centers in the United States, Houston\u2019s commercial property market offers its increasingly diverse business community access to quality premises and excellent infrastructure.<\/p>\n<p><em>Offices<\/em><\/p>\n<ul>\n<li>\u00a0<a href=\"https:\/\/www.us.jll.com\/content\/dam\/jll-com\/documents\/pdf\/research\/q4-2020-office-insights\/Houston-Office-Insight-Q4-2020.pdf\">Total vacancy is 25%<\/a> in both the CBD and suburban locations.<\/li>\n<li>\u00a0Vacancy rates are evenly spread across asset classes.<\/li>\n<\/ul>\n<p><em>Retail<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates have been increasing on a quarterly basis and <a href=\"https:\/\/www2.colliers.com\/en\/research\/houston\/q3-2020-houston-retail#:~:text=Houston's average retail vacancy rate,to 6.1%25 in Q3 2020.&amp;text=Among the major property types,and Power Centers at 5.1%25\">currently exceed 6%<\/a>.<\/li>\n<li>\u00a0Vacancy levels are above the city average in neighborhood centers and strip malls.<\/li>\n<li>\u00a0Total occupancy has <a href=\"https:\/\/www.naipartners.com\/research\/houston-retail-q3-2020-quarterly-market-report\/\">decreased by 80 bps<\/a> over the past 12 months.<\/li>\n<\/ul>\n<p><em>Industrial<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates are just <a href=\"https:\/\/www.us.jll.com\/content\/dam\/jll-com\/documents\/pdf\/research\/industrial-insights-q4-2020\/Houston-Industrial-Insight-Q4-2020.pdf\">under 9.5%<\/a> and they\u2019re expected to drop further in the coming months.<\/li>\n<li>\u00a0Supply and demand are balanced except for pockets of oversupply in Northeast and Northwest Houston.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p><strong>Seattle <\/strong><\/p>\n<p>Seattle is one of the top 10 largest office markets in the United States, although the number of office and retail-based companies has decreased over the past year. Over-supply is now a reality in office and retail verticals.<\/p>\n<p><em>Offices<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates climbed <a href=\"https:\/\/www.cushmanwakefield.com\/en\/united-states\/insights\/us-marketbeats\/seattle-bellevue-marketbeats\">above 11%<\/a> and exceeded that figure in the Financial District.<\/li>\n<li>\u00a0Only two projects delivered new supply in 2020, bringing 1.7 million square feet into the market, however, supply continues to exceed demand.<\/li>\n<\/ul>\n<p><em>Retail<\/em><\/p>\n<ul>\n<li>\u00a0Average vacancy rates are <a href=\"https:\/\/kidder.com\/market-reports\/seattle-retail-market-report\/#:~:text=In the 2nd quarter 2020,-commerce still increased 37%25\">under 3%<\/a>.<\/li>\n<li>\u00a0More than 140 retail operations are permanently closed in downtown Seattle, however, other large retailers are moving in or expanding thereby keeping vacancy rates down.<\/li>\n<\/ul>\n<p><em>Industrial<\/em><\/p>\n<ul>\n<li>\u00a0Vacancy rates exceed 5%.<\/li>\n<li>\u00a0The amount of available supply has been increasing since mid-2020.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>Looking for more market insights? Click below to find out more&#8230;<\/p>\n<p><a href=\"https:\/\/offices.net\/news\/1616-2\/\">United States Commercial Property Supply and Vacancy Rates 2021 (Part\u00a01)<br \/>\n<\/a><a href=\"https:\/\/offices.net\/news\/office-features-to-look-out-for-in-the-second-half-of-2021\/\">Office Features to Look Out for in the Second Half of 2021<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In a previous blog post we examined the performance of the commercial real estate market in some major US cities. This is the second article in this series, which uses data from late 2020 and early 2021 to examine vacancy and supply rates in cities such as Los Angeles, Chicago, Atlanta and Houston. These statistics [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[186,357,472,174,344,40,371,261,349],"tags":[471,460,473,47,414,397,449,470],"class_list":["post-1634","post","type-post","status-publish","format-standard","hentry","category-atlanta","category-best-cities-for-business-in-the-usa","category-brooklyn","category-chicago-2","category-houston","category-los-angeles","category-office-space-forecasts-and-trends","category-seattle","category-trends-and-statistics","tag-471","tag-atlanta","tag-brooklyn","tag-chicago","tag-houston","tag-los-angeles","tag-seattle","tag-vacancy-and-supply"],"_links":{"self":[{"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/posts\/1634","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/comments?post=1634"}],"version-history":[{"count":10,"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/posts\/1634\/revisions"}],"predecessor-version":[{"id":1813,"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/posts\/1634\/revisions\/1813"}],"wp:attachment":[{"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/media?parent=1634"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/categories?post=1634"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/offices.net\/news\/wp-json\/wp\/v2\/tags?post=1634"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}