The bounce back for the market in 2022 seems to be slowly continuing in the industrial sector, with the office sector struggling to keep up, but still managing to show signs of improvement. Here’s the latest according to the 2022 CBRE|Hubbell Commercial quarterly market surveys.
Tenants in the marketplace will have more options to choose from than in recent history in the industrial sector, as it is growing even faster than in the previous quarter. There are 3.3 million square feet of industrial space under construction. This construction is split between the Northeast and Northwest suburbs of Des Moines, and Altoona has the highest portion of the new industrial development at 41%.
With this new development, CBRE projects a temporary increase in vacancy in the industrial sector, with more competition for tenants, but the absorption by the market is strong, providing confidence that the vacancy rate will subside quickly after the introduction of the new spaces into the market. Other projections include an increase in leases rates due to rising land and construction costs, and an increase in demand for land with access and proximity to Interstates 35 and 80.
Hubbell Realty’s Four Mile Distribution Center in Ankeny will have 157,500 square feet upon completion. Hubbell’s Crosswinds II was completed in the spring of 2022. Of the 3.3 million square feet under construction, roughly 1.8 million is projected to be complete in 2022.
The office sector is still sitting at a relatively high vacancy, Q1 increased in overall vacancy in large part due to Wells Fargo vacating their Park Ave office space. But Downtown Des Moines is experiencing positive net absorption, with a decrease in downtown vacancy.
There is still little expectation of construction in the office sector with few starts or deliveries projected for 2022. There has been an increase in large block space occupiers, the return-to-the-office for larger corporations is the expected first step in renewing strength in the office sector. Currently, tenants are seeking out niche office corridors, focusing on surface parking, nearby amenities, and the like.
Retail continues to make a strong recovery post-pandemic. With CBRE|Hubbell Commercial lease rates for retail deals rising past even what they were at in 2019. Retail leasing activity has strongly rebounded with the return to shopping from consumers.
Read more about how retailers adapted to the pandemic via the Business Record’s panel including Tyler Dingel, Senior Vice President, CBRE|Hubbell Commercial.
Multifamily has made a major comeback in the first quarter of 2022. Hubbell has had investment from out-of-state investors assisting in the tremendous growth. Absorption progressed as projected in the fourth quarter, setting a national record for the absorption total, with vacancy rates accordingly dropping. Rent rates also have positive year-over-year growth.