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U.S. Commercial Real Estate Markets Proved Stable to Begin 2017


U.S. Commercial Real Estate Markets Proved Stable to Begin 2017

NAI Global’s Quarterly Office, Industrial and Retail Market Reports Analyze Top 21 US Markets

New York – (June 5, 2017) – NAI Global, a leading global commercial real estate brokerage firm, found that the U.S. retail, office and industrial real estate markets experienced steady demand, backed by strong economic data. This performance was highlighted by increases in rental rates, while vacancy held remarkably steady across the top 21 U.S. markets.

“Although growth was slower in the first quarter, U.S. office, retail and industrial markets sustained positive trends that reflect robust economic health,” said Jay Olshonsky, FRICs, SIOR, President of NAI Global. “Stable conditions in the market show that commercial real estate continues to attract investors, particularly those looking to diversify their portfolio allocation.”

Low unemployment, rising wages and solid job growth in January and February reinforced continued low vacancy and rising rental rates in the U.S. office real estate sector. While vacancy remained at 9.7 percent for a third consecutive quarter, net absorption dropped to 10.8 from 23.1 million square feet, indicating a slowdown in new leasing. But with deliveries and construction up over the fourth quarter, there is a clear projection for office space demand. This projected demand is echoed by the upward trend in rental rates, which increased 1.8 percent in the first quarter.

In Q1, the industrial sector saw rising rents and steady vacancy. Net absorption and construction showed slight decreases, but remained strong. With more than 50 million square feet delivered for the third straight quarter, the industrial sector is seeing historical levels of new space added, while vacancy is at its lowest in over 10 years. Rental rates increased 1.7 percent to a national average of $6.14, continuing a positive streak going back to 2011, when average rates were $5.52 nationwide. 

Similarly, there wasn’t a great deal of change in the first quarter in the retail sector. Vacancy remained low, hovering below five percent for the second consecutive quarter. Net absorption fell from 28.9 to 15 million square feet from the fourth quarter into the first, with numbers similar in the first quarters of 2016 and 2015. Deliveries continued the trend over the past five years with 84.6 million square feet projected to be delivered through the rest of 2017. This is dwarfed by numbers seen before the economic downturn, with 200 million square feet being delivered annually from 1998-2008. However, rental rates rose in 19 out of the top 21 U.S. markets, and 1.8% on average nationwide to $16.70 -- a level not seen since the 2008.

“Steady growth of rental rates and lower vacancy continue to point to strong foundations for real estate investment across these three sectors,” Olshonsky said.  “Sustained construction and deliveries along with solid economic data also indicate this is a continuing trend.”

For a link to the NAI Global Industrial Market Report, click here.

For a link to the NAI Global Office Market Report, click here.

For a link to the NAI Global Retail Market Report, click here.

For a link to the NAI Global National Overview Report, click here.

About NAI Global

NAI Global is a leading global commercial real estate brokerage firm. NAI Global offices are leaders in their local markets and work in unison to provide clients with exceptional solutions to their commercial real estate needs. NAI Global has more than 400 offices strategically located throughout North America, Latin America, Europe, Africa and Asia Pacific, with over 7,000 local market professionals, managing in excess of over 425 million square feet of property.  Annually, NAI Global completes in excess of $20 billion in commercial real estate transactions throughout the world.

NAI Global provides a complete range of corporate and institutional real estate services, including brokerage and leasing, property and facilities management, real estate investment and capital market services, due diligence, global supply chain and logistics consulting and related advisory services.

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06/06/2017 - 12:30


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