CRE shattered performance records in the third quarter, driven by household wealth and record demand.
"Some of the results are shocking," Marcus & Millichap's John Chang says. "I anticipated strong commercial real estate momentum in the third quarter as the lockdowns had pretty much ended, new households were being formed, spending had increased and companies were shifting their positioning toward stronger growth—but I was still surprised."
At the start of Q3, many companies were taking a wait-and-see approach, Chang says, and leasing was soft. But despite that, about 26 million square feet of space was leased in Q3, on par with the quarterly pace of demand from 2018 and 2019. That brought vacancy down 10 basis points to 16.1%.
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