Q4 2022 North America Market Report


Relentless demand continued for warehouse-and-distribution space across North America in 2022. The year ended with a surge in fourth-quarter absorption along with more double-digit annual rent growth. While growth has slowed from the fever pitch of 2021, there have been no signs of significant deterioration in the fundamentals driving demand for industrial space. Inflation-adjusted retail goods sales and truck tonnage are at high levels, and containerized imports at U.S. seaports are posting seasonally adjusted all-time highs. At 10.6%, rent growth in the United States remains near the record highs hit in 2021 as the pace of recent quarterly gains has been moderating. In Canada, strong demand and low vacancy produced 2022 average rent growth of nearly 17% nationwide with increases of 20% in Montreal and 15% in greater Toronto.

In the U.S., there was a surge in tenant growth in the fourth quarter, whose 116.5 million SF of net absorption brought the total for 2022 to 402.6 million SF. In an average year prior to the pandemic, such a total would be record setting. For example, it’s 136% more than the 170.5-million SF of growth in 2019. Instead, it represents a 22% year-over-year decline from the 516.6 million SF of Covid-driven record expansion in 2021.

In Canada, a similarly strong fourth quarter with 12.4 million SF of tenant growth pushed net absorption to 25.1 million SF for the year, down 40% from record-setting 2021. The average vacancy rate across its six largest markets was 1.9% in 2022. Owing to geographical limitations and land-use policy constraints the shortage of available land has become a major concern, particularly in the key Canadian markets of Vancouver and Greater Toronto. READ MORE >



Office demand in the United States ended the year with its largest quarterly deficit since Covid vaccines became available in early 2021. Hybrid work schedules have become the norm and companies are shedding space in anticipation of slowing growth and possible recession.  Negative net absorption totaled 13.6 million SF in Q4, bringing the total for the year to negative 18.6 million SF. In the nearly three years since the lockdown, the slide has totaled 131.7 million SF, representing 1.6% of inventory and more than three average years of growth. Nearly 60 million SF of new supply is slated for delivery at the end of the first quarter.

Electronically monitored U.S. and Canadian workplaces show that employee traffic remains down as much as half overall compared to January 2020. That’s where the broad similarities end. The vacancy rate at the end of 2022 is 12.7% in the U.S. and 8.7% in Canada, where demand has been positive over the last four quarters.  The size of the U.S. Q4 contraction was unexpected. There had been more than 25 million SF of net absorption over the previous five quarters, for example, and gross leasing volume exceeded 100 million SF in each quarter this year but with increased requirements for smaller spaces.

Going into 2023, new headwinds are emerging, including widening fears of recession as the Federal Reserve remains resolved to curb high inflation with high interest rates that have slowed the economy.   The anticipation of slowing has more companies making job cuts. The effects of steep layoffs in the once space-hungry technology sector hit West Coast markets hardest. Metros posting the most negative net absorption in 2022 were San Francisco at 5.3 million SF, Los Angeles’ 3.7 million SF and 2.6 million SF in San Jose.  Sublease space hit a record 230 million SF and is up more than 16% since Q4 2021. READ MORE >



Retail real estate continued its rebound with another healthy year in 2022. In the United States, the 20.7 million SF of Q4 net absorption brought the total for the year to 74.8 million SF.  It was the most demand since 2017 and exceeded new supply by 30 million SF as the overall vacancy rate ticked down to 4.2%, the lowest in 15 years.

Canada’s vacancy rate held steady at 2% at the end of 2022, the lowest since 2014. With operating fundamentals improving, investment activity for retail real estate has also accelerated over the last several quarters while the 12-month trend in transaction volumes remain near the highest on record.

The healthy annual totals occurred despite higher prices consumers have been paying for food, gas and housing and rising interest rates. U.S. retail sales excluding auto, gasoline and non-store retailers – a measure that best encapsulates brick-and-mortar retail sales – pushed to a new monthly record of $384 billion in September.  After falling sharply during the depths of the pandemic, gross leasing activity has bounced back and settled within a consistent range between 60 million and 70 million SF quarterly since Q1 2021.  Sales activity has moderated since the Fed began raising interest rates, but the 2022 average sales price of $224 per SF is up 9.8% over last year and 18.5% over the five-year average since 2017.

The heaviest investment activity centers on large gateway markets such as New York, Los Angeles and Chicago and high-growth metros like Dallas/Ft. Worth, Atlanta, Phoenix and Houston.  A reduced volume of new construction is helping to restore the sector’s supply-demand fundamentals that had been knocked askew by e-commerce’s formidable challenge to brick and mortar along with the punishing effects of the lockdown. READ MORE >


Overall tenant demand in the United States continued to weaken as the pandemic-fueled apartment market and its sky-high rent growth returned to earth in 2022.

Net absorption totaled 169,0659 units in 2022, down from the outsized 697,041 units absorbed in the apartment boom of 2021, when a near-record 11 million job openings drove up wages and consumers spent savings accumulated in the lockdown. There also was pent-up demand from first-time renters, and well-paid workers throughout the North and Midwest decamped to toil remotely from the Sun Belt.

The market began hit an inflection point late in 2021 as the Federal Reserve said “transitory” no longer suitably described the rising inflation manifested in the shock of high gas prices that arrived in Q1. Hit with new economic uncertainty that included higher interest rates and expectations for a downturn and recession, prospective tenants started backing away from increased rents that were soaring an average 11% nationally. The combination of sharply reduced demand along with delivery of an elevated number of new apartments has cut rent growth to 3.6% for 2022.

There was no slowing in the Canadian multifamily market.In 2022 Canada topped its 2021 net absorption record and posted record 7.7% rent growth in each of the last two years. The surge in tenant demand has driven down the 2022 vacancy rate to 0.6% in Toronto, which has 44% of the nation’s inventory with 379,204 units. The vacancy rate in Vancouver, the second largest metro with 15% of the base, settled at 0.7%.

But in the U.S., at the end of Q4 2022, Sun Belt markets such as Palm Beach, Orlando and Las Vegas that dominated 2021’s rent growth were posting double-digit percentage-point declines. While there is no oversupply nationally, there are several markets, including Austin and Phoenix – metros with more than 20% annual rent growth in 2021 – in which new deliveries are outpacing recent demand. READ MORE >