Key Findings:
- While every market included in our index has experienced job recovery since the nadir of the economic downturn, pandemic-related public health restrictions have varied significantly by market, and some markets have recovered more swiftly than others. The markets that ranked highest across the economic metrics in the index were Nashville, Tampa and Dallas.
- Nearly every U.S. office market is challenged by the uncertainty surrounding the increase in remote work brought on by the pandemic, but gateway cities have generally been impacted the most. The markets that ranked highest across the office metrics in the index were Tampa, Miami and Dallas.
- The COVID-19 crisis brought an unprecedented level of uncertainty and disruption to office demand. Three key themes have emerged surrounding office space as post-pandemic changes come into focus: the war for talent, the future of office space, and the migration of companies to new markets.
- The industrial market fared better than other property types during the pandemic. Average asking rents for industrial space have risen by 35.7% nationally over the past five years. Given the uptick in demand and rents for industrial space, industrial sales volume accelerated in many markets in the wake of COVID-19, counter to the decline in sales volume for other property types. The markets that ranked highest across the industrial metrics in the index were Boston, Atlanta and Philadelphia.
- Nationally, multifamily occupancy ticked down to 95.5% at 1Q21 from its cyclical high of 95.9% a year earlier, and effective rents declined 0.9% over the past 12 months, likely a result of the joining of some households amid financial pressure. However, according to the National Multifamily Housing Council, rent collections remained strong throughout the past year, with end of month collections remaining above 93% through April 2021. The markets that ranked highest across the multifamily metrics in the index included Dallas, Phoenix and Atlanta.
- With the vaccine rollout going smoothly and the resumption of travel beginning, the hospitality sector is beginning to thaw. As of March 2021, U.S. hotel occupancy had risen to 54.6%, an increase of nearly 1,600 basis points since the start of the pandemic a year prior. As in other property sectors, hotels in mid-size Sunbelt cities outperformed those in larger coastal and gateway markets during the pandemic. The markets that ranked highest across the hospitality metrics in the index included Atlanta, Phoenix and Tampa.
- Even prior to the pandemic, retail market fundamentals had been under pressure for several years. By the fourth quarter of 2020, the share of retail transactions conducted online had risen to 14.0%, up from 9.6% at 1Q18. Perhaps intuitively, retail real estate has performed best in areas that had fewer pandemic-related restrictions on social distancing and gatherings. Generally, secondary and tertiary markets in the Sunbelt have outperformed larger markets during the past year. The markets that ranked highest across the retail metrics in the index were Nashville, Houston and Tampa.