Whether you are a business owner renting office, industrial or retail space; or a landlord or investor
considering buying commercial real estate, keeping tabs on market trends can help shed light on the
strengths and/or weaknesses of your opponent’s hand and assist with decision-making that will likely
have significant and long term financial implications.
Market trends represented by the graphs to the right include: 1) the amount of vacant space in all
product types is either very low or declining. This is a reflection of the dramatic increase in supply-side
costs in comparison to demand-side rents over roughly the past 10 years; and 2) as a result of the
supply/demand imbalance mentioned above, commercial property values and rents are trending
upwards across the board and will likely continue in this trajectory, barring another major recession,
until such time as the reward of new construction becomes commensurate with the risk.
So what are the takeaways for both landlords and tenants? Landlords with existing buildings or investors
looking to purchase commercial property in the near future should see attractive appreciation in the
coming years (assuming the economy continues to grow or at least remain stable). Tenants, on the other
hand, may want to consider signing longer-term leases to lock-in favorable rental rates and thereby
control one of, if not their largest, operating cost components.