New industrial starts in 2023 totaled 314.6 million square feet, down significantly from the 593.2 million square feet in 2022.
The 2024 office market outlook suggests an increase in these discounted sales, driven by high rates and reduced demand.
Due to tighter underwriting policies and more expensive capital, transaction activity will continue to diminish in 2024.
The U.S. office market has logged $33.8 billion in office sales for 2023, at a yearly average of $196 per square foot.
Port activity normalized, manufacturing surged in North America, and interest rate hikes dampened transaction activity and new development.
Demand for office space is down, expenses are up and values have dropped, while maturing loans continue to pressure the sector.
Industrial vacancy rates rose 70 basis points from 3.9% in January 2023 to 4.6% in October but remained unchanged month-over-month.
About 31 million square feet of new office space began construction in 2023, nearly half of the starts from the last two years.
The volume of loan maturities is concerning as weaker demand, rising costs and lower property values squeeze office owners while banks and investors reduce exposure to offices.
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