Commercial Real Estate Market Update Q3 2016

As 2016 comes to an end and the deep freeze arrives (I already feel like I need a warm weather vacation), the market for commercial real estate continues to do well. The downside is that we may be nearing the peak of the current cycle in both the office & industrial market.

The industrial market as a whole absorbed a little over 1,000,000 SF of space in the third quarter of 2016. Vacancy rates continue their downward trajectory and have fallen to approximately 7% in the metro area. However, a quick look at development trends suggest a peak may have been reached. Developers have clearly shifted from ‘spec’ development to ‘build-to-suit’  projects as demand has leveled off. What does this mean for Tenant & Buyers? Fewer choices and increased pricing. The biggest challenge for tenants today is finding ONE space that meets their needs. The one exception: Rogers & Dayton. If you need 50,000 SF or more in that market, you could get a very good deal.

The outlook for office market is following the same path. Office space in the North Loop remains hot and rents are increasing across the metro. Employers are continuing to re-evaluate their space to attract top talent. The trend is towards collaborative work spaces that include fewer private offices, more open space and buildings with worker-friendly amenities.

If you are looking to lease or buy, let us provide you with a free market analysis. We look forward to the opportunity to work with you on your next real estate project. Give us a call today!