To help you understand what is going on in the commercial real estate sector and what we expect to happen in the future, our highly experienced Kiplinger Letter team will keep you abreast of the latest developments and forecasts (Get a free issue of The Kiplinger Letter or subscribe). You’ll get all the latest news first by subscribing, but we will publish many (but not all) of the forecasts a few days afterward online. Here’s the latest…
Let’s check in on commercial real estate. This year, 2024, promises to be a mixed year. Sectors like office space are in for more pain, but the picture isn’t so dark elsewhere, and a few segments will thrive. The office market hasn’t seen the worst yet.
Office Space
Vacancy rates are set to go even higher, which is sobering, considering that the national rate just hit an all-time high of 19.6% in the fourth quarter. Look for vacancies to peak at nearly 21% later this year as demand for space stays subdued.
While more office workers are returning, many continue to work hybrid schedules, a couple of days in the office and a few days at home. So, employers need less space overall, even if their workforces are coming back to the office. Hybrid schedules mean fewer workstations are needed since workers rotate and share common spaces. And, in some metro areas, such as Boston, Houston, Miami, San Francisco and Washington, D.C., the fraction of the remote workforce isn’t falling much.