These days, if something has a number associated with it, it’s usually going up. From flowers to fuel, prices and rates are rising at unprecedented rates. Commercial real estate is no exception, especially when it comes to commercial vacancies.
Is the rise of remote work hurting investors? Most commercial real estate pros know that it has had an effect, but recent surveys and studies show several other potential reasons for the abnormal increase in commercial vacancy rates lately. Let’s look at them.
Reasons for Rising Commercial Vacancy Rates
Obviously, the elephant in the room here is COVID-19. Both directly and indirectly, it has caused shifts and unusual trends the past couple of years. The effect varied greatly depending on the number of restrictions a region had to address, but some common reasons include:
- How restrictive the containment strategies were on local businesses
- The percentage of remote workers in an area compared to in-office workers
- Migration from denser population areas to areas more spread out
- Financial support by the government for CRE pros
- Changes in consumer behavior and purchasing habits
The reasons are countless and still being discovered, but the fact remains that commercial vacancy rates are rising in different areas of the country.
Where Vacancy Rates Are Rising Most
Again, COVID restrictions and related factors resulted in a big difference to which metro areas saw rising vacancy rates. But no one saw an increase like New York City, which climbed from a 7.7 percent rate before the pandemic to a 13.4 percent rate in the third quarter of 2022. Other notable rates, which are listed in an article by Bigger Pockets, include:
|Metro||Pre-Pandemic Rate||Q3 2022 Rate|
|Dallas-Fort Worth, Texas||15.14%||17.57%|
|San Francisco, California||6.28%||15.45%|
|Los Angeles, California||10.22%||13.81%|
|New York City||7.7%||13.4%|
How CRE Software Helps
The good news is that the right commercial real estate software can help you predict, manage and invest based on real-time, updated data for commercial vacancy rates and other critical data. You can access this information from any device and any location and its data automation and market rate features are unmatched. You can filter or view numbers for every investment size, from an individual property to an entire portfolio. The tool scales with you and there is a team available to make sure you’re getting the most out of the software. With Quarem, you’ll see vacancy rate trends before your competitors do.
If you’re interested in seeing how Quarem gives you real-time market data to identify commercial vacancy rate trends and other valuable information, request a demo today.