Real estate

Real estate occupancy: The starting point matters

Real estate occupancy: The starting point matters

With prices down 20% from the April 2022 peak,1 there may be a buying opportunity in commercial real estate. Plus, occupancy rates for most property types are in good shape from a historical perspective despite being tested during the past three years of higher interest rates. In contrast to low historical occupancy rates in the office sector, occupancy rates in several residential and consumer-driven sectors including single-family rentals, apartments, industrial, non-mall retail (strip centers), self-storage, and medical office look attractive compared to the end of the Global Financial Crisis (GFC), which was the last time real estate emerged from a period of repricing, and long-term averages.

Compared to post-GFC:

  • 94% average occupancy for these sectors in 4Q-2024 is 5% higher than the 89% post-GFC average in 4Q-2009.
  • Each sector currently has a higher occupancy rate than at the start of the post-GFC era.

Compared to the long-term average:

  • 94% average occupancy for these sectors in 4Q-2024 is higher than the 93% long-term average (2005-2024).
  • All these sectors except apartments have higher current occupancy rates than their 20-year averages.

 

Conclusion: Great place to start

After significant repricing, current occupancy conditions across most real estate property types (other than traditional office) are in a great starting place compared to the start of the post-GFC recovery and appear favorable compared to long-term averages.

Footnotes

  • 1

    Source: Green Street’s Commercial Property Price Index for core sectors (apartments, industrial, office, and retail). The percent change in this index from the April 2022 peak to January 2025 is -19.8%.

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