Context

The coronavirus pandemic represents an unprecedented disruption to the commercial real estate market. Workplace policies are changing in remote-compatible industries – there is an ever-growing list of companies shifting toward allowing employees to work from home, in some cases permanently. At the same time, nearly half of retailers are not paying rent – only 58.6% of retail rents were paid in April and May. However, with the winter season entering full gear, holiday retail sales are expected to increase 3.6 to 5.2% over 2019 with total sales estimated between $755B and 766B, which should hopefully increase the ability for retailers to begin paying full rent once more.

As of mid-May 2020, CBRE expected “U.S. office vacancy to rise from its current 12% to almost 15% within a year.” However, office vacancy had already risen to 17% in the first quarter of 2020, according to an REIS report. By the second quarter, it fell only 2% to 15%.

In May, the Urban Land Institute produced a consensus forecast that provides some context:

Commercial real estate transaction volume reached $588 billion in 2019, a post-Great Financial Crisis peak. Volume is expected to be over 50% lower in 2020 with a forecast of $275 billion. Forecasts for ‘21 and ’22 show growth of $400 billion and $500 billion, respectively.

According to a National Association of Realtors survey from May 2020 (p. 11), 22% of commercial members who responded believe that the commercial real estate market transactions will decrease by more than 20% in the next 12 months, while 15% believe that 1-year leasing volume will decrease by more than 20%.

Recent data from November through December, released from the National Association of Realtors Survey, indicates that office vacancy rates will fall 3% heading into 2021, while retail vacancy rates will continue to increase to 11%. Industrial and multi-family vacancy rates are predicted to stay level at 5% and 6% respectively, while hotels experience a 2% drop.

What will the average vacancy rate for commercial real estate (i.e. multi-family, industrial, retail, and hotel) be in Q2 of 2021, in the US?

Resolution Criteria

This question will resolve according to the average commercial vacancy rate reported by the National Association of Realtors' Quarterly Commercial Real Estate Trends & Outlook Report.