7 Signs of Improving CRE Market Conditions

Cushman & Wakefield is urging commercial real estate professionals to watch for seven signs of improving commercial real estate market conditions in a report. They are:

A return to “normal” activity

The firm expects reduced restrictions—especially for those who have been vaccinated—matched with warm weather and summer vacation will drive activity up and push more of the country “back to normal.”

Companies reopening offices

Cushman reports employee occupancy rates remain low, but companies are setting firmer targets for employees to return on a more regular basis. The firm reports as office reopenings continue in earnest during Q3, companies will pilot different remote work policies, hybrid models and office layouts to find the right fit for their culture, business and people.

Uptick in office occupancy

There’s an upswing, the firm is noticing. Weekly occupancy doubled in June to 32% after bottoming at 15% this February. Cushman said a steady improvement is occurring with the vaccine rollout with a summer plateau in store until August and September when students return for the school year.

Rise in subway ridership

New York, San Francisco and other markets have seen that happening this year. As far as car traffic is concerned, New York City’s for the week of June 14 marked the first week in 2021 traffic congestion was in line with 2019.

Interest in space rising

As of this month, the amount of office space being searched for by companies is up YoY in major markets, including Boston +146%; Manhattan +27%; San Francisco +19%; and Silicon Valley +107%, the Cushman study noted.

Improving market fundamentals

Office-using job growth is improving, adding 389,000 in 2021, and new leasing activity was up 27.9% YoY in the second quarter of this year, according to the report. Cushman said office tour activity more than doubled in the first half of the year, but it will take time for that to lead to lease executions and then absorption. Bottom line: look to absorption to begin to improve in the second half of 2021. . Retail recovery

Employees returning to the office will increase foot traffic for retail and restaurants in business districts around the country, Cushman predicted.