It was a stellar year for CRE in 2021, to the tune of $193 billion in the 3rd quarter alone. That’s 19% better than pre-pandemic spending.
What’s more, office, industrial and retail occupancy rates all rose, with average rents also increasing for the latter two.
The biggest winners were multi-family housing, life-science labs and warehouses. Their success was key to the $462 billion in commercial real estate sales reported by the Wall Street Journal for the first nine months of 2021. That’s 10% better than the same period in 2019, and a record-setting high.
Supply chain shortages, affordable housing and life sciences drive growth
CRE flourished thanks to booms in certain sectors canceling out lulls in others. Office and retail remained sluggish in their recovery. But supply chain shortages and online shopping drove demand for warehouses sky high. The vacancy rate in key markets plummeted, such as Southern California’s Inland Empire where it dropped below 1%.
There’s also been a surge in financing for multifamily affordable housing projects, with a robust $70 billion available from Fannie Mae alone. As for the impressive performance for life sciences properties, the pandemic accelerated investment in biotech and medical startups. The industry received more than $30 billion in venture capital funding during the first three quarters last year.
In short: It’s been a very good year
While not all sectors benefited equally, CRE as a whole soared in 2021. And that’s some new year news worth celebrating!