KEY INDICATORS POINT TO STABILITY IN OFFICE SECTOR

SURVEY SHOWS LAND PRICES CONTINUING TO CLIMB

BETTER THAN EVER ? RETAIL CONTINUES TO REBOUND

INVESTORS RETURN TO HOSPITALITY AS LEISURE TRAVEL REBOUNDS

The uncertainty for the longterm health of the office sector appears to be giving way to stability , thanks to a steady vacancy rate , reduced subleasing space , and increasing absorption in 3Q2021 , according to a recent report by Colliers .

Office vacancy in the U . S . ticked up to 14.9 percent in 3Q2021 , but that figure is just a 0.1 percent increase from the second quarter . Vacancy jumped 3.2 percent from 1Q2020 through 1Q2021 , suggesting the market has reached a peak , which remains below the 16.3 percent figure from the Great Recession .

Absorption topped 3.2 million sf in 3Q2021 , with 56 percent of markets representing positive absorption . Asking rents are another source of optimism . Downtown Class A rents averaged $ 51.08 / sf , a decrease of 0.6 percent from 2Q2021 but a year-over-year uptick of 0.4 percent . Suburban Class A rents remained unchanged from the previous quarter at $ 33.58 / sf , a 5.1 percent jump from 3Q2020 .

Farmland has been a hot commodity in the past few years , with the average price per acre jumping 7 percent in 2021 to $ 3,380 , according to the National Agricultural Statistics Service . But a recent survey from Farm Progress shows that the market is significantly more competitive in highly desirable areas like the Midwest and Great Lakes states . More than 60 percent of respondents said they have paid between $ 7,000 and $ 10,000 per acre of farmland , with another 20 percent shelling out $ 10,001 to $ 13,000 per acre . The final quintile of respondents said they have paid more than $ 13,000 per acre , with some transactions in Iowa topping $ 20,000 .

While these dollar amounts are certainly raising eyebrows , the value of farmland across the country remains as varied as expected , with average sale prices in locations like New Mexico and Wyoming staying under $ 1,000 per acre . Still , all 50 states reported increasing prices in August 2021 , according to the NASS .

While those in retail real estate may still feel a bit unsettled as we approach two years after the onset of the COVID-19 pandemic , market fundamentals are pointing to a strong recovery for the sector . According to data from JLL , retail foot traffic in November 2021 was up 3.9 percent compared to November 2019 . Sales rose to $ 627.5 billion , up 30.6 percent from monthly figures at the start of the pandemic . Additionally , bankruptcies have hit a five-year low , with openings to overtake closures for the first time since 2016 .

JLL ’ s retail report showed strong regional differences in rent growth , with Sunbelt metro areas outperforming West Coast , Midwest , and Northeast locations . Atlanta ( 7.5 percent ), Las Vegas ( 7.4 percent ), and Tampa ( 6 percent ) had the highest increases in retail rents . San Francisco ( -5.5 percent ), Boston ( -4.1 percent ), and Los Angeles ( -0.5 percent ) were the three cities that saw rents decline .

Midway through 2021 , leisure travel in the U . S . picked up in a major way , with foot traffic at airports nearing 80 percent of 2019 levels and average daily rates at hotels topping pre-COVID-19 figures by 6 percent , according to a report by Marcus & Millichap . But hospitality will continue to be a bifurcated CRE sector into 2022 with business and convention traffic continuing to lag . Vacation-friendly locations like the Florida Keys and Colorado Springs , for example , could be primed for a strong year ahead , while urban markets dependent on business travel could continue to struggle .

Investment activity in hospitality looks to be regaining strength . The average sale price per room in the 12 months ending in 3Q2021 was $ 94,000 , an increase of 3 percent compared to 2020 . The average cap rate in that same time was 8.6 percent , down from 9 percent in 2020 .

This page , left to right : Tom Merton , Dariusz Banaszuk , Carlina Teteris , Andresr