A Beginner's Guide To Investing In Commercial Real Estate - Forbes
Ultimately, the decision to invest in commercial real estate will depend on your overall goals. Some people prefer to stick with single-family ...
vacancy levels
For example, <anchor>vacancy levels</anchor> sharply rose for some properties like office space, apartments and retail, while data centers and industrial properties performed well. However, most experts agree that long-term contractual leases are helpful with commercial real estate. In other words, if a commercial property is under a long-term contractual lease, there's less worry about near-term market exposures, and it can help protect investors from economic volatility.
Commercial Real Estate Performance Remained Strong in the First Quarter of 2022 | Nareit
Commercial Real Estate Performance Remained Strong in the First Quarter of 2022 \| Nareit[Skip to main content](#main-content) [Accessibility statement](#accessibility)

Username

Password

- [Reset your password](/user/password "Send password reset instructions via email.")

- [Create new account](/user/create-account "Create a new user account.")
- [Reset your password](/user/forgot-password "Send password reset instructions via email.")

Filter by Type

Company Page

Event

News

Tax Report

[Home](/ "Home")

- [Join Nareit](/nareit/membership)
- [Login](/saml/login)

## Main navigation

- [What's a REIT?](/what-reit) Open submenu




- [What's a REIT?](/what-reit)
- [REIT Basics](/what-reit/reit-basics)
- [Types of REITs](/what-reit/types-reits)
- [REIT Sectors](/what-reit/reit-sectors)
- [REIT Glossary](/what-reit/glossary-reit-terms)
- [REIT FAQs](/what-reit/frequently-asked-questions-about-reits)
- [The History of REITs](/what-reit/history-reits)
- [How to Form a REIT](/what-reit/how-form-reit)

![REIT Sectors](/sites/default/files/styles/medium_cropped_rectangle/public/2020-12/sector-navgraphic.jpg?itok=LCGBDw-B)

Explore REIT Sectors

REITs invest in the majority of real estate property types, including offices, apartment buildings, warehouses, retail centers, medical facilities, data centers, cell towers, telecommunications and hotels.

[Learn more](/what-reit/reit-sectors)

- [Investing in REITs](/investing) Open submenu




- [Investing in REITs](/investing)
- [Why Invest in REITs](/investing/why-invest-reits)
- [How to Invest in REITs](/investing/how-invest-reits)
- [REIT Directory](/investing/reit-directory)
- [List of REIT Funds](/investing/reit-funds)
- [Sustainability](/investing/reits-sustainability)
- [REIT Assets by State](https://www.reitsacrossamerica.com)
- [Global Real Estate](/investing/global-real-estate-investment)
- [Investor Resources](/investing/investor-resources)

![REIT Industry Sustainability Report 2024](/sites/default/files/styles/medium_cropped_rectangle/public/2024-05/Cover_2024%20Sustainability%20Report_980x551.jpg?itok=o4iI8JTH)

REIT Industry Sustainability Report 2024

The REIT Industry Sustainability Report 2024 includes industry trends, REIT sustainability reporting data and analysis, as well as useful information on the publicly traded U.S. REIT industry’s primary sustainability, social responsibility, and governance practices.

[Learn more](/investing/reits-sustainability/2024-reit-sustainability-report)

- [REIT Data](/data-research) Open submenu




- [REIT Data](/data-research)
- [REIT Indexes](/data-research/reit-indexes)
- [REIT Market Data](/data-research/reit-market-data)
- [Research Library](/data-research/research-library)

![2024 Mid-Year Report](/sites/default/files/styles/medium_cropped_rectangle/public/2024-07/2024%20Midyear_Thumbnail2a_450x250.jpg?itok=nMp9EPM8)

2024 Mid-Year Report

A deeper look at the U.S. economy and commercial real estate markets shows why REITs are well positioned to navigate the economic environment and provide opportunities for investors over the remainder of 2024.

[Learn more](/news/blog/market-commentary/2024-midyear-reit-public-private-returns)

- [Industry News](/news "Industry News") Open submenu




- [Industry News](/news)
- [Publications](/news/publications)
- [Advertising](/news/advertise-nareit)
- [Media Contacts](/news/media-contact)

![REITs Building Stronger Relationships with Fixed Income Investors](/sites/default/files/styles/medium_cropped_rectangle/public/2024-09/Investment_REITRoundtable_0.jpg?itok=kZQoNsIe)

REITs Building Stronger Relationships with Fixed Income Investors

Kevin McClure and Mark Streeter discuss how REITs are faring with fixed income community.

[Learn more](/news/articles/reits-building-stronger-relationships-with-fixed-income-investors)

- [Events](/what-reit) Open submenu




- [Upcoming Events](/events)
- [CEO Forum & Advocacy Day](/events/ceo-forum-advocacy-day)
- [HR Forum](/events/hr-forum/hr-forum-2024)
- [REITweek](/events/reitweek)
- [REITwise](/events/reitwise)
- [REITworks](/events/reitworks/reitworks-2024-esg-conference)
- [REITworld](/events/reitworld)
- [REIT IR Symposium](/events/symposium)
- [Webinars](/events/webinars)

![Register for REITworld](/sites/default/files/styles/medium_cropped_rectangle/public/2024-08/2024%20REITworld_980x551.jpg?itok=wlgFs3pD)

Nareit's REITworld: 2024 Annual Conference

REITworld 2024, scheduled for Nov. 18-21 in Las Vegas, NV, will bring together REIT management teams, investors, and analysts for topical sessions, one-on-one meetings, and networking.

[Register Now](https://reit.cventevents.com/event/00bef37a-1e02-4cfc-ba8e-4e14f900868b/summary?utm_source=website&utm_medium=reit.com&utm_campaign=reitworld&utm_id=reitworld&utm_content=homepage-menu)

- [About Nareit](/what-reit) Open submenu




- [About Nareit](/nareit)
- [Leadership Team](/nareit/nareit-leadership-team)
- [Staff](/nareit/staff-directory)
- [Membership](/nareit/membership)
- [Nareit Brand](/nareit/our-brand)
- [Nareit Foundation](/nareit/nareit-foundation)
- [Advocacy](/nareit/advocacy)
- [Industry Awards](/nareit/industry-awards)
- [Career Resources](/nareit/career-resources)
- [Advertising](/news/advertise-nareit)

![Membership](/sites/default/files/styles/medium_cropped_rectangle/public/2020-12/membership.jpg?itok=WANYNjq2)

Nareit Membership

For 60 years, Nareit has led the U.S. REIT industry by ensuring its members’ best interests are promoted by providing unparalleled advocacy, investor outreach, continuing education and networking.

[Learn more](/nareit/membership)

# Commercial Real Estate Performance Remained Strong in the First Quarter of 2022

## Breadcrumb

1. [Home](/)
2. [Industry News](/news)
3. [Market Commentary Blog](/news/blog/market-commentary)

05/16/2022
\| by



[John Worth](/news/authors/john-worth)

[Savannah DeLullo](/news/authors/savannah-delullo)

SHARE

Commercial real estate fundamentals continue to point to strong performance in the retail, multifamily, and industrial sectors with vacancy rates mostly declining on a year-over-year and quarter-to-quarter basis, robust rent growth, and positive excess demand. While there has been improvement in the office sector, the impact of work-from-home and the uncertainty surrounding near-term office usage continues to dampen performance.

Overall, the continued solid fundamentals reflect a healthy demand for commercial real estate across sectors. In the retail space, demand is driven by solid consumer behavior as households return to pre-COVID shopping and dining patterns. Meanwhile, retail supply remains muted.

In the industrial sector, there continues to be high demand as e-commerce logistics needs continue to grow. The continuing high levels of new supply appear to be catching up with net absorption in the industrial space.

Demand for multifamily space, while down from recent highs, continues to be well above historic averages and continues to outstrip historically high levels of new supply. Office markets experienced low, but positive, levels of net absorption that were outstripped by low level of new supply.

### Vacancy Rates and Rent Growth

![Vacancy Rates](/sites/default/files/media-images/2022-05%20Chart%201%20Vacancy%20Rates%20980px.jpg)

Vacancy rates fell in industrial and retail sectors, declining by 17 bps and 14 bps, respectively, to 4.1% and 4.5%. This is the lowest vacancy rate for the industrial sector on record and the lowest for retail since the third quarter of 2018. Apartment vacancy rates have ticked slightly higher to 4.9%, up 11 bps from the prior quarter and up 25 bps from its record low in the third quarter of 2021. Nevertheless, apartment vacancy rates are well below the historical average as they have been below 6% for the past four consecutive quarters. Prior to that, rates hadn’t been below 6% since 2001.

Office vacancy rates, in contrast, have stabilized as they have been essentially unchanged for the past four quarters following an increase of 200 bps over the prior year. Their current level of 12.2% is elevated above the pre-pandemic rate of 9.6% in the fourth quarter of 2019.

![Rent Growth](/sites/default/files/media-images/2022-05%20Chart%202%20Rent%20Growth.jpg)

Rent growth accelerated for most property types. Apartment rents rose 12.2% compared to the first quarter of 2021, but leveled out compared with recent increases. Apartments are experiencing the highest rents and the highest rent growth on record.

Industrial rents rose 11.0% over the past four quarters and 3.2% from last quarter. The industrial sector is also experiencing its highest rents and rent growth on record.

Retail rents are steadily improving, increasing 3.9% over the past year and 1.2% over the past quarter. While growth is occurring at a slower rate than the multifamily and industrial sectors, retail rents are the highest they have ever been.

Office rents edged slightly higher compared to a year earlier, the second consecutive quarter of year-over-year increase since early 2020. While office rents growth has been recovering slowly, it remains well below pre-pandemic levels.

### Demand and Supply

Following a quarter of robust demand growth in the commercial real estate market, excess net demand slowed in the first quarter of 2022 for most property sectors, but remains positive.

![Demand and Supply of Retail Space](/sites/default/files/inline-images/2022-05%20Chart%203%20Demand%20and%20Supply%20of%20Retail%20Space.jpg)

Retail properties saw the third consecutive quarter of robust demand and were the only sector with increased demand, with excess net demand rising 9.2% from the fourth quarter of 2021. Net absorption (i.e. growth in demand) was 24.4 million square feet. There continues to be very little new construction in the retail sector which has been the case throughout the pandemic.

![Demand and Supply of Industrial Space](/sites/default/files/inline-images/2022-05%20Chart%204%20Demand%20and%20Supply%20of%20Industrial%20Space.jpg)

Industrial markets had net absorption of 98.2 million square feet which is a sharp decline from the prior two quarters’ record levels, but still relatively high compared with historical averages. It fell 29.7% below the prior quarter’s level and 41.3% below the record level from the third quarter of 2021. A lack of available space may have kept demand from growing faster as industrial vacancy rates dropped 14 bps to a record low of 4.1%.

![Construction of Industrial Properties](/sites/default/files/media-images/2022-05%20Chart%205%20Construction%20of%20Industrial%20Properties.jpg)

Industrial/logistics facilities are a key part of the supply chain, helping goods bought online get to the last mile delivery to consumers. Construction has surged during the pandemic, with nearly 590 million square feet of new facilities under construction. This is equal to 3.5% of the existing stock in the first quarter of 2021, up from the previous record high of 3.0% in the prior quarter. For comparison, construction activity was less than 1% of existing stock at a comparable point in the recovery from the 2008-2009 financial crisis.

![Demand and Supply of Office Space](/sites/default/files/media-images/2022-05%20Chart%206%20Demand%20and%20Supply%20of%20Office%20Space_0.jpg)

Office markets had 3.7 million square feet of net absorption in the first quarter which represents the sector’s third consecutive quarter of positive net absorption following five quarters of negative values during the pandemic. Supply continues to exceed demand in the office sector. This excess supply is indicative of the challenges facing the office sector due to the pandemic as vacancy rates are at their highest levels ever and many businesses continue to allow employees to work from home.

![Demand and Supply of Apartments](/sites/default/files/media-images/2022-05%20Chart%207%20Demand%20and%20Supply%20of%20Apartments.jpg)

Multifamily demand eased for the second quarter in a row, to 58,000 units, from 62,500 in the fourth quarter. Low vacancy rates (making open apartments difficult to find) and rising rents creating affordability challenges could be contributing to this slowdown in demand. Net absorption over the past four quarters, which averages out seasonal differences, edged down from the prior quarter but demand continues to exceed new supply.

##### Read more news about:

[Market Analysis & Research](/taxonomy/term/614)

### Get Nareit Market Commentary blog posts delivered straight to your inbox.

Subscribe

## You Might Also Like...

[**What's a REIT?** \
\
REITs, or real estate investment trusts, are companies that own or finance income-producing real estate across a range of property sectors. These real estate companies have to meet a number of requirements to qualify as REITs. Most REITs trade on major stock exchanges, and they offer a number of benefits to investors.](/what-reit)

[**Why Invest in REITs** \
\
REITs historically have delivered competitive total returns, based on high, steady dividend income and long-term capital appreciation. Their comparatively low correlation with other assets also makes them an excellent portfolio diversifier that can help reduce overall portfolio risk and increase returns. These are the characteristics of real estate investment.](/investing/why-invest-reits)

[**About Nareit** \
\
Nareit serves as the worldwide representative voice for REITs and real estate companies with an interest in U.S. real estate. Nareit’s members are REITs and other real estate companies throughout the world that own, operate, and finance income-producing real estate, as well as those firms and individuals who advise, study, and service those businesses.](/nareit)

**Subscribe to the Developments Blog**

Email Address

First Name

Last Name

Company

Title

City

State\- None -AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareDistrict of ColumbiaFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming

## Get Daily Real Estate News

[Home](/ "Home")

- [Facebook](http://www.facebook.com/REITsNAREIT)
- [LinkedIn](https://www.linkedin.com/company/nareit)
- [Twitter](https://twitter.com/REITs_NAREIT)
- [YouTube](http://www.youtube.com/NAREIT1)
- [RSS Feed](/reit/rss-feeds)

©Copyright Nareit 2024. All rights reserved.

###### 1875 \| Street, NW   Suite 500   Washington, D.C. 20006

1-202-739-9400

1-800-3-NAREIT

1-202-739-9401 (fax)

## Footer links

- [Search](/search)
- [RSS feeds](/reit/rss-feeds)
- [Privacy](/reit/privacy-statement)
- [Cookie Policy](/reit/cookie-policy)
- [Terms of Use](/reit/terms-and-conditions-use)
- [Contact Us](/reit/contact-us)

Nareit® is the worldwide representative voice for REITs and publicly traded real estate companies with an interest in U.S. real estate and capital markets. Nareit's members are REITs and other businesses throughout the world that own, operate, and finance income-producing real estate, as well as those firms and individuals who advise, study, and service those businesses. National Association of Real Estate Investment Trusts® and Nareit® are registered trademarks of the National Association of Real Estate Investment Trusts (Nareit).

![LEED Certificate](/sites/default/files/2020-11/LEED-Logo.jpg)