2021 Q4 North America Market Report

INDUSTRIAL OVERVIEW
DEMAND FOR LOGISTICS SPACE SOARS
Fueled by an unprecedented boom in household spending during the pandemic, demand for warehouse-and-distribution space soared 147% in 2021, driving down the vacancy rate to a record 4.3%. Net absorption totaled 503.4 million SF in 2021 compared to 203.7 million SF for 2020. Fourth-quarter 2021 demand totaled 136.9 million SF, down from 157.9 million SF in Q3 but up 38% from the 99.2 million SF of net absorption for the same period a year earlier. Year-over-year rent growth is at a record high, averaging 8% and more among logistics properties.

It’s difficult to imagine a more favorable economic background to support spending on consumer goods. Americans have been flush with cash from three rounds of stimulus checks plus the increased savings they’ve accrued while social distancing. The Commerce Department reports that the real annualized pace of household spending averaged $166 billion from 2015-19 but has surged by $840 billion since the beginning of 2020. READ MORE >

OFFICE OVERVIEW
DEMAND IMPROVES IN THE FOURTH QUARTER
Tenant demand continued for the second straight quarter to close out 2021, as employers grew increasingly confident that vaccines and safety protocols have dramatically reduced the risk of reopening the workplace.

There were 15.1 million SF of net absorption in Q4, which reduced the negative total for the year to 39.8 million SF. In 2020, office net absorption was 74.5 million SF in the red. But the glut of vacant direct and sublet space, virtually frozen rents, leasing volume below pre-pandemic levels, new space emerging from the pipeline and widespread hybrid work setups all combine to make the timing of a full office recovery difficult to predict. READ MORE >

RETAIL OVERVIEW
DEMAND RETURNS TO PRE-COVID LEVEL
Tenant demand returned to pre-pandemic levels in 2021 with net absorption totaling 75.2 million SF – the best full-year performance since 2017 – as the combination of massive government subsidies to consumers during the health crisis along with robust wage growth pushed brick-and-mortar retail sales to record levels. Growing vaccination rates enabled retail operations to normalize, and pre-pandemic levels of foot traffic have returned to many open-air and lifestyle centers. Many national retailers are reporting improved same-store sales. Several major merchants, including discounters Dollar General, Dollar Tree, Five Below, and home goods sellers TJX Companies and Burlington, have announced plans for significant expansion of store counts. Additionally, the number of merchants seeking bankruptcy protection has fallen to a five-year low. Openings outpaced closures for the first time since 2016. READ MORE >

MULTIFAMILY OVERVIEW
2021 DEMAND SMASHES RECORDS
Vaccine distribution, easing pandemic restrictions, improved job opportunities and a reversal of suburban migration with young people moving out on their own combined to produce a historic surge in apartment demand and rent increases in 2021.

A record 717,590 apartments were absorbed in 2021. That is a 91% increase over the prior annual record of 376,069 units set in 2020 and a 120% increase over yearly average tenant growth since 2016. After a slowing economy in the third quarter blamed on the spread of the Delta variant, the fourth quarter was rebounding until the Omicron variant hit. There were 95,910 units absorbed in the fourth quarter and 299,854 units absorbed in the second half. Vaccine distribution, easing pandemic restrictions, improved job opportunities and a reversal of suburban migration with young people moving out on their own combined to produce a historic surge in apartment demand and rent increases in 2021. A record 717,590 apartments were absorbed in 2021. That is a 91% increase over the prior annual record of 376,069 units set in 2020 and a 120% increase over yearly average tenant growth since 2016. After a slowing economy in the third quarter blamed on the spread of the Delta variant, the fourth quarter was rebounding until the Omicron variant hit. There were 95,910 units absorbed in the fourth quarter and 299,854 units absorbed in the second half. READ MORE >